Its financial house back on stabler ground, CIFI Holdings isn’t out of the woods yet

The developer’s new offshore debt restructuring eases its most urgent default risk, but it must still restore its cash flow and repair its operations

Key Takeaways:

• CIFI Holdings concluded an offshore debt restructuring that took effect on Dec. 29, marking the legal conclusion of a three-year default overhang
• The company’s cash decreased by nearly 8% in the first half of 2025, while its total debt contracted by less than 3%

Lee Shih Ta

For embattled property developer CIFI Holdings (Group) Co. Ltd. (0884.HK), the end of 2025 was not just an ordinary time marker. The company announced that its offshore debt restructuring officially took effect on Dec. 29, ending a drawn-out process mirrored across China’s battered real estate sector. The restructuring saw all of CIFI’s U.S. dollar-denominated senior notes and senior perpetual capital securities canceled on the same day, with associated listed bonds scheduled for delisting in early 2026. The development was highly symbolic for the company, ending an offshore debt default risk that has dogged it for the past three years.

The milestone marks a major break for CIFI since its liquidity crisis erupted in 2022. Since then the developer has slogged through numerous rounds of creditor negotiations, as China’s real estate market continued to worsen.

In terms of outcome, the offshore restructuring wasn’t simply an extension of debt maturities, which would just kick the can down the road. Instead, the original U.S. dollar debt was exchanged for multiple new instruments, including new notes, mandatory convertible bonds, and new loans, accompanied by equity adjustments and changes to the governance structure of CIFI’s board. For creditors, the deal represented a shift from simply holding fixed coupons to becoming stakeholders in the company’s future. For CIFI, it secured some breathing room to try and rebuild its cash flow and broader operations.

That context is helpful to understanding the board changes included in the announcement. Two non-executive directors nominated by the creditor group formally joined the board and will not receive the usual director pay, symbolizing the transition of creditors from claimants to overseers. The new arrangement is more a forced marriage than a romantic one. But under the circumstances, it aligns more closely with expectations for the new role the company’s creditors will assume in assisting with risk control and financial discipline.

Nonetheless, the restructuring doesn’t mean CIFI’s problems will magically disappear. Understanding the company’s true predicament requires a closer look at its operational fundamentals.

Sea of red ink

A look through CIFI’s 2025 midyear report shows it recorded about 12.28 billion yuan ($1.76 billion) in revenue in the first half of last year, down by nearly 40% from the 20.21 billion yuan it earned a year earlier. Its pre-tax loss for the period swelled by 170% to about 6.12 billion yuan, reflecting dual pressures of China’s property downturn and high financing costs.

The company’s financing costs during the period increased by 5% year-on-year to 1.94 billion yuan, indicating that its interest burden remained substantial. Fair value losses totaling 675 million yuan on its investment properties suggest that commercial real estate valuations have yet to bottom out. Meanwhile, the company made 883 million yuan in provisions on expected credit losses, underscoring difficulties it may face in collecting money it is owed.

The company’s cash totaled about 10.16 billion yuan at the end of last June, down about 8% from the end of 2024, while its total outstanding borrowings decreased only by a marginal 3% from roughly 86.65 billion yuan to 84.21 billion yuan. Given its high debt and limited cash, the faster rate of cash depletion compared to debt reduction indicates an eroding safety cushion, as short-term liquidity pressures persist.

We should note the company’s midyear report isn’t entirely devoid of more positive news. While revenue from CIFI’s property sales halved year-on-year to approximately 8.1 billion yuan, resulting in a segment loss of 2.05 billion yuan, the company’s property management and property investment arms collectively contributed a profit of about 1.05 billion yuan. This indicates that, even in an environment of extreme contraction, CIFI’s core businesses haven’t entirely crumbled.

The company will certainly get some debt relief with the new restructuring, as some debt gets converted to equity, some is written down and deadlines are extended. However, such improvement is mostly a defensive adjustment, and the company still needs to restore itself to operational health. While some of that is within its own hands, a big element is out of its control as long as the property market remains weak.

In summary, CIFI looks a bit like a patient just out of the operating room after major surgery — physically frail and still requiring strong support in the intensive care unit. But at least the market’s perception of the company will shift from questioning its ability to simply survive, to assessing its ability to rebuild its financial and operational houses.

CIFI’s completion of its offshore debt restructuring is undoubtedly a significant milestone. Among China’s many private property developers still mired in negotiations or already defaulted on their debt, it has at least scored a major victory by adding a higher degree of certainty to its finances.

But at the end of the day, the fate of the company and its peers still rests in a Chinese real estate market that has yet to show signs of improvement. The latest data from the National Bureau of Statistics indicates nationwide sales for residential properties declined year-on-year last November, while declines persisted in real estate development investment, even as the rate of decline narrowed. The bottom line is that recovery is still off in the distance – a reality that will continue to hamper CIFI and its peers as they struggle to dig themselves out of their current holes.

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