Bond Sales Boost Construction; Shares Rise: Evergrande Update
Chinese developers are increasing their sales of onshore bonds to fund project construction.
(Bloomberg) -- Chinese developers are increasing their sales of onshore bonds to fund project construction, a sign that loosened government policy is helping to ease the sector’s liquidity crunch.
That comes as the nation’s defaulting builders make little headway on restructuring dollar notes, testing the patience of distressed-debt investors who stepped in to buy after an industrywide liquidity crunch. Shimao Group Holdings Ltd., a bellwether for financial contagion, is seeking to extend repayment on about 6 billion yuan ($947 million) of high-yield trust products over three years, according to people familiar with the matter.
Meanwhile, S&P Global Ratings said the recent resignations of auditors from three Chinese developers suggest transparency issues persist in the sector.
A Bloomberg Intelligence gauge of developers gained 1.2% Wednesday after two days of sizable declines, but Chinese high-yield dollar bonds erased their advance by midafternoon, credit traders said. Zhenro Properties Group Ltd.’s 5.45% onshore bond due 2024 ended a volatile trading day with a record gain. That followed an initial 25% plunge on concern it won’t redeem a $200 million bond as planned in two weeks, which prompted a 30-minute trading halt.
- Shimao Seeks Repayment Extension on $947 Million in Trusts
- China Developer Bondholders Brace for Long Road to Repayments
- China Junk Dollar Bonds Lose Morning Gains as Shimao Slides
- China AMCs May Not Be White Knights for Developers’ Bondholders
- Hong Kong Sells Premium Land Site for Record-Breaking Price (1)
- Cinda, Huarong Are Banks’ Buffers Against Problem Property Loans
- China Oceanwide Says Lender Named Receivers After Unit’s Default
- China Real Estate Bonds Supported by New Guidelines, AMC Support
Shimao Seeks Repayment Extension on $947 Million in Trusts (6:11 p.m. HK)
Shimao Group Holdings Ltd. is seeking to extend repayment on about 6 billion yuan of high-yield trust products over three years, according to people familiar with the matter. Shimao told investors Wednesday that it has about 1.3 billion yuan of these short-term investments due this month and 4.7 billion yuan maturing between April and August, said the people, asking not to be identified discussing a private matter.
The developer proposes to repay 25% of the principal in 2022, 35% next year and the rest in 2024, the people said. The products were issued through Citic Trust Co., the nation’s largest trust firm.
Moody’s Withdraws RiseSun’s Rating On Insufficient Information (4:25 p.m. HK)
Moody’s Investors Service has withdrawn RiseSun Real Estate Development Co.’s Caa2 corporate family rating, according to a statement.
The firm said it’s “decided to withdraw the rating because it believes it has insufficient or otherwise inadequate information to support the maintenance of the ratings.”
Builders Sell More Onshore Bonds to Fund Construction (12:32 p.m. HK)
Chinese developers are increasing their sales of onshore bonds to fund project construction, a sign that loosened government policy is helping to ease the sector’s liquidity crunch.
China Vanke Co., the country’s second-largest builder by contracted sales last year, on Wednesday was set to complete its second 3-year, 3 billion yuan ($473 million) bond of 2022 in the domestic interbank market. Proceeds of both notes will go toward building projects, according to bond issuance documents.
China Developers’ Auditor Change Flags Governance Risk, S&P Says (12:21 p.m. HK)
The recent resignations of auditors from three Chinese developers suggest transparency issues persist in this sector, said S&P.
Changing accounting firms just ahead of year-end results raises questions about the quality of a company’s governance, the ratings provider wrote in a report. It added that more developers may face this problem as auditors push back on opaque practices such as the use of off-balance sheet debt.
Jinke Plans to Sell Up to 1.5b Yuan of 4-Year Bonds (12:04 p.m. HK)
Jinke Properties Group Co. plans to sell as much as 1.5 billion yuan of 4-year bonds at estimated coupon rate of 7%-8%, according to a statement on the Shenzhen stock exchange’s website.
Ronshine Leads Early Gains for China High-Yield Dollar Bonds (10:38 a.m. HK)
Chinese high-yield dollar bonds rose Wednesday morning after having the weakest day in February according to a Bloomberg index.
Ronshine China Holdings Ltd.’s 10.5% note due March 1 surged what would be a record 11.1 cents to 72.1 cents as of 10:06 a.m. in Hong Kong, according to Bloomberg-compiled data, on pace for highest close since Feb. 10.
Zhenro Properties 5.45% 2024 Bond Halted in Shanghai (9:50 a.m HK)
Trading was suspended 30 minutes, according to a statement from Shanghai’s stock exchange, after the note slumped 25%.
The company’s shares and dollar bonds have plunged in recent days, with traders citing concern that the Chinese builder won’t redeem a $200 million bond as planned.
Logan Group Adds to Repurchases of 2022 Dollar Bond (8:19 a.m. HK)
Logan Group Co. purchased $1 million of its 7.5% note due Aug. 25 from Jan. 14-Feb. 15, according to a filing to the Hong Kong exchange. The company has bought $21 million of the bond, representing 7% of principal.
Cinda, Huarong Are Banks’ Buffers Against Problem Property Loans: BI (8:08 a.m. HK)
China’s bad-debt managers could help cushion 10 Chinese banks from the corrosive effects of 126 billion yuan worth of problem property loans, wrote Bloomberg Intelligence analyst Francis Chan.
She said lenders may boost their real estate loans this year without assuming outsized credit risk after cutting their exposure last year, backed by ample collateral and bad-debt coverage.
China Developer Bondholders Brace for Long Road to Repayments (7:59 a.m. HK)
At least a dozen developers defaulted on their dollar bonds over the past year, with an estimated $48.9 billion outstanding pending debt resolution, according to a Feb. 3 report by Standard Chartered Plc. Among them, only China Fortune Land Development Co. released a brief restructuring framework, seven months after defaulting on its dollar note in February 2021. As of earlier this month, the firm had reached agreements with creditors on just 20% of its debt.
China Oceanwide Says Lender Named Receivers After Unit’s Default (8:18 p.m. HK)
China Oceanwide Holdings Ltd. has said a lender has appointed receivers over shares of a wholly owned subsidiary after sending a default notice.
The company said the creditor claimed $159.3 million in an acceleration notice, according to a Hong Kong stock exchange filing. The troubled developer said it received a letter dated Monday that representatives from Kroll were appointed as receivers over assets. Oceanwide said it is negotiating with the creditor, OCM Harbour Investments Pte, for an updated repayment plan.
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