![]() Shares in Evergrande's electric vehicle unit eased after jumping on Monday.Įvergrande's dollar bonds have firmed marginally over recent days but remain at distressed levels below 30 cents on the dollar. Shares in Guangzhou R&F Properties (2777.HK) and Sunac China Holdings (1918.HK) each fell by about 10%. and European indexes have rallied.Īn index tracking Hong Kong-listed mainland property stocks (.HSMPI) fell 1.8% on Tuesday, compared to a 0.3% gain in the local benchmark (.HIS). The central bank, however, on Wednesday urged financial institutions to cooperate with relevant departments and local governments to maintain the "stable and healthy" development of the property market and safeguard housing consumers' interests.Īn index of China high-yield debt (.MERACYC), which is dominated by developer issuers, fell to its lowest since the pandemic drawdown in 2020, and has lost almost 20% since May - while comparable U.S. 1, and regulators there have not made any comment specifically on Evergrande and its woes in recently. "If the whole property sector comes under pressure it could become a much bigger issue to resolve, so I think it is better Chinese authorities step in now and try and limit the fallout."Ĭhina is on seven-day holiday from Oct. ![]() "The cost of funding has increased massively for all these companies and it is actually a contagion risk," said an emerging markets credit analyst in London, declining to be named. The cost of insuring exposure to China's sovereign debt also came under pressure, and five-year credit default swaps jumped 4 basis points to a 16-month high, IHS Markit data showed. The rating downgrades and possible near-term defaults on offshore debt obligations will pile pressure on Chinese developers to access fresh funding to repay notes worth nearly $300 billion due over the next two years.īond prices collapsed at a handful of the most indebted firms, with Fantasia bonds crumbling below 30 cents on the dollar while Kaisa Group and Central China Real Estate also saw price falls. "This will be a vicious cycle for the developers that are not strong enough, because there is not enough liquidity in the market for everyone." The liquidity issues have increased as many developers were not able to issue fresh debt to refinance, and as their ability to raise cash from selling properties fell due to new regulations, he said. ![]() "Since the Evergrande crisis, investors have become more worried and focused about Chinese developer's repayment ability," said Thomas Kwok, head of equity business at Hong Kong brokerage CHIEF Securities. Sinic declined to comment on the ratings downgrades. It said the firm was likely to default on notes totalling $246 million due on Oct. The risk caused by a few Chinese real estate companies in the short term will not undermine Hong Kong's capital market, Chinese central bank governor Yi Gang said.S&P Global Ratings lowered its rating on Sinic, saying it had run into a "severe liquidity problem and its debt-servicing ability has almost been depleted". Trading in Kaisa's shares, which have lost 75% this year, was suspended on Wednesday.Įvergrande's stock has plunged 88% this year amid the debt crisis, which has fuelled worries about a broader contagion and prompted officials to offer assurances that a fallout can be contained. 7 for new notes due Jat the same interest rate. Kaisa's default came after it failed last week to secure the minimum 95% approval needed from offshore bondholders to exchange the bonds that were due Dec. Kaisa is also in talks with another bondholder group, the first person said.Īs cross defaults have been triggered, Kaisa's $12 billion bonds would become immediately due and payable if holders of at least 25% of the aggregate amount declare so, Fitch said. Other financing ideas are also on the table. The group previously offered $2 billion in fresh debt to help Kaisa repay its onshore and offshore debts, sources have said. 7, sent the company draft terms of forbearance late on Monday. The group of Kaisa offshore bondholders, who say they own 50% of the notes that were due on Dec. ![]() Kaisa said it was open to talks on forbearance. The bondholders hold over 25% of Kaisa's $12 billion offshore bonds.įormal discussions on forbearance and financing plan could commence once the NDA is in place, the people said, who declined to be named as the talks are confidential.īut an agreement is unlikely in the next few weeks as the talks are still at an early stage, the first source said.
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