The price of covenant flexibility: Is USD6 enough for Shui On Land bondholders?

Research evidence excerpt

The price of covenant flexibility: Is USD6 enough for Shui On Land bondholders?

FICC Research

Credit Research

31 July 2026

China Property

The price of covenant flexibility: Is

USD6 enough for Shui On Land

Wilson Ho, CFAbondholders?

+852 2903 2659

wilson.ho@barclays.comWe assess the implications of Shui On Land's proposed

amendments for bondholders, benchmark against recent Barclays Bank, Hong Kong

consent solicitations of the Asia HY corporate issuers, and

evaluate how the revised covenant package compares with

those of other China HY property bonds.

Shui On Land (SHUION) is offering a USD6 consent fee per USD1,000 principal to amend the

2029s' covenant package1 ahead of its interim result announcement in late August. Based on

Asian USD bond standards, we do not think the fee is low, as it screens above many consent

solicitations. However, the covenant concessions are meaningful, particularly the potential for

increased shareholder distributions and greater reliance on unconsolidated earnings in

covenant calculations. SHUION explained that such changes are aimed at better reflecting its

asset-light strategy and eliminating the effect of investment property (IP) revaluation on its

dividend payout, but the revised EBITDA framework may possibly double-count associate/JV

income, and FCCR would remain below the 2.0x hurdle even after revision. Given only a simple

majority approval threshold and the consent economics on offer, we think the proposal is likely

to pass unless opposed by some large holders. The deadline to submit consents is 3 August

2026.

Comparing FCCR methodologies across HY China property bonds highlights that the same 2.0x

FCCR threshold can imply very different debt capacity. While FCCR tests are common in Asia HY