ব্যক্তি Reuters A man walks past a no-entry traffic sign near the headquarters of China Evergrand Group in Shenzhen, Guangdong Province, China on September 26, 2021. Reuters / Ally Gun / File
Written by Andrew Galbraith and Vidya Ranganathan
SHANGHAI (Reuters) – Bonds and shares issued by Chinese developers fell on Friday as coastal markets bounced back from a week-long holiday on how regulators offered to control the transition from the cash-strapped China Evergrand Group’s debt problem.
Evergrand, whose shares have been on hold since it requested a trading shutdown on Monday to announce a major transaction, is facing one of the country’s biggest defaulters, fighting with more than 300 300 billion.
The company missed coupon payments on its ড 2 bond account last month and will face another প্রায় 150 million early next week. The potential collapse of one of China’s largest orrowers has raised concerns about the risk of infection in the property sector, the world’s second-largest economy, as its debt-based peers have been increasingly downgraded by default.
That uncertainty has shattered bonds issued by property companies such as Kaisa Group, Central China Real Estate and Greenland over China’s National Day holiday.
On Friday, Onshore bonds were caught selling. The Shanghai Stock Exchange suspended trading on two bonds issued by small developer Fantasia Group China Co, which fell more than 50%, after shareholder Fantasia Holdings Group missed a আন্তর্জাতিক 206 million international market debt repayment deadline on Monday.
“Normally, a default in a small firm would be seen as strange. However, given the harsh liquidity for many Chinese developers now, market participants are questioning whether it could be a precursor to voluntary error by other developers in short-term liquidity positions, but large temporary long-term debt.” “Chang Wei Liang, DBS Bank’s credit and FX strategist, said in a note.
In a statement on Thursday evening, Fantasia Group said its activities were normal and that it has maintained close contact with investors. It added that it was “actively promoting debt protection services.”
Onshore bonds of Xiamen Yuzu Grand Future Real Estate Development, Yango Group and Guangzhou R&F Properties also declined on Friday.
China Ayuan Group said in a statement on Friday that it had raised funds to repay an onshore bond maturing October 12, another of its onshore bonds fell more than 7.5% in morning trade.
Fears of an Evergrand infection also affected the price of the mainland stock, which dragged the tracking index down 1.75% to the real estate sector in sales trades, as opposed to an increase of about 1% for blue-chip shares.
In Hong Kong, the Hang Seng Property and Construction Index fell more than 0.6%, compared to a 0.1% decline for the larger.
Bloomberg reported on Thursday that advisers to some dollar bondholders were invited to make a call at 0630 EST (1030 GMT) on Friday to discuss strategies and how to expand the group.
In addition, Evergrand Dollar-Bond Trustee has hired city law firm Mayer Brown as a consultant, according to a source familiar with the matter. City and Mayor Brown declined to comment.
A group of bondholders has previously selected investment bank Moylis (NYSE 🙂 and company and law firm Kirkland & Ellis as advisers on a possible restructuring of the bond discipline, two sources said in September.
Chinese regulators have not commented specifically on Evergrande during the week-long holiday from October 1, although the central bank last Wednesday called on financial institutions to cooperate with relevant departments and local governments to maintain “stable and healthy” development to protect the interests of property markets and housing consumers.
In a statement late Thursday night, the state-backed Global Times said the authorities’ allegiance to the debt cap, known as the “three red lines”, indicated that “China has its own priorities and is focused on reducing the real estate bubble and reducing risk.”
Investors were waiting to hear from the company after it requested a halt to trading in its shares in Hong Kong on Monday, awaiting an announcement about a major transaction. Evergrand Property Services Group, a spin-off listed last year, requested that it close, citing it as “a potential general offer for the company’s shares.”
Although asset sales will temporarily ease concerns over Evergrand’s cash flows, analysts also see the tediousness of Evergrand and some other Chinese property firms that cannot be resolved quickly.
An index of China’s high-yield debt, influenced by developer issuers, is sliding throughout the week and hit a five-year low on Friday morning. It could soon spread them wide on the record.