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Pro-Western, retired general Pavel sweeps Czech presidential vote

  • Pavel wins in runaway vote over ex-PM Babis
  • Pavel gives clear support backing Ukraine, West
  • Pledges to end divisions brought by Babis, incumbent Zeman
  • Voter turnout record high in presidential election

PRAGUE, Jan 28 (Reuters) – Former army chief and high NATO official Petr Pavel won the Czech Republic’s presidential election on Saturday with a pledge to keep the country firmly anchored in the West and bridge society’s political differences.

Pavel, a 61-year-old retired general running for office for the first time, won 58.3% of the vote with all voting districts reporting final results, defeating billionaire ex-premier Andrej Babis, a dominant but polarising force in Czech politics for a decade.

Pavel, a social liberal who had campaigned as an independent and gained the backing of the centre-right government, conveyed a message of unity when addressing his supporters and journalists at a Prague concert venue on Saturday as results showed he had won.

“Values such as truth, dignity, respect and humility won,” he said.

“I am convinced that these values are shared by the vast majority of us, it is worth us trying to make them part of our lives and also return them to the Prague Castle and our politics.”

Pavel has also fully backed continued support for Ukraine in its defence against Russia’s invasion.

Czech presidents do not have many day-to-day duties but they pick prime ministers and central bank heads, have a say in foreign policy, are powerful opinion makers, and can push the government on policies.

Pavel will take office in March, replacing outgoing Milos Zeman, a divisive figure himself during his two terms in office over the past decade who had backed Babis as his successor.

Zeman had pushed for closer ties with Beijing and also with Moscow until Russia invaded Ukraine, and Pavel’s election will mark a sharp shift.

Turnout in the runoff vote that ended on Saturday was a record high 70.2%.

The result of the election will only become official when published in a legal journal on Tuesday, but the outcome of the poll was already clear on Saturday.

Babis, 68, a combative business magnate who heads the biggest opposition party in parliament, had attacked Pavel as the government’s candidate. He sought to attract voters struggling with soaring prices by vowing to push the government do more to help them.

Babis and Prime Minister Petr Fiala congratulated Pavel on his victory. Slovakia’s liberal President Zuzana Caputova appeared at Pavel’s headquarters to congratulate him, a demonstration of their close political positions.

Ukrainian President Volodymyr Zelenskiy congratulated Pavel on his election on Twitter and said he looked forward to close cooperation.

Reuters Graphics

EU AND NATO TIES

Pavel has backed keeping the central European country of 10.5 million firmly in the European Union and NATO military alliance, and supports the government’s continued aid to Ukraine.

He supports adopting the euro, a topic that successive governments have kept on the back burner, and supports same-sex marriage and other progressive policies.

A career soldier, Pavel joined the army in Communist times, was decorated with a French military cross for valour during peacekeeping in former Yugoslavia in the 1990s, and later rose to lead the Czech general staff and become chairman of NATO’s military committee for three years before retiring in 2018.

“I voted for Mr. Pavel because he is a decent and reasonable man and I think that the young generation has a future with him,” said Abdulai Diop, 60, after voting in Prague on Saturday.

Babis had campaigned on fears of the war in Ukraine spreading, and sought to offer to broker peace talks while suggesting Pavel, as a former soldier, could drag the Czechs into a war, a claim Pavel rejected.

Reporting by Robert Muller, Jason Hovet and Jan Lopatka; Additional reporting by Jiri Skacel and Fedja Grulovic; Editing by Hugh Lawson, David Holmes and Helen Popper

Our Standards: The Thomson Reuters Trust Principles.

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Trump executive Weisselberg prepares for jail on Rikers Island

NEW YORK, Jan 10 (Reuters) – A longtime executive for Donald Trump is expected to be sent to New York’s notorious Rikers Island jail after being sentenced on Tuesday for helping engineer a 15-year tax fraud scheme at the former president’s real estate company.

Allen Weisselberg, the Trump Organization’s former chief financial officer, pleaded guilty in August, admitting that from 2005 to 2017 he and other executives received bonuses and perks that saved the company and themselves money.

Weisselberg is expected to be sentenced to five months behind bars, after paying nearly $2 million in taxes, penalties and interest and testifying at the criminal trial of the Trump Organization, which was convicted on all counts it faced.

The sentence will be imposed by Justice Juan Merchan, who oversaw the trial in a New York state court in Manhattan. Weisselberg would likely serve 100 days with time off for good behavior.

Those days will probably not be easy for Weisselberg, 75, at a jail known for violence, drugs and corruption. Nineteen inmates there died last year.

“You’re going into a byzantine black hole,” said Craig Rothfeld, a prison consultant helping Weisselberg prepare for lockup.

50-YEAR RELATIONSHIP

Many convicts in New York City facing one year or less behind bars head to Rikers Island, which lies between the New York City boroughs of Queens and the Bronx and houses more than 5,900 inmates.

Rothfeld spent more than five weeks at Rikers in 2015 and 2016 as part of an 18-month sentence for defrauding investors and tax authorities when he was chief executive of the now-defunct WJB Capital Group Inc.

He now runs Inside Outside Ltd, which advises people facing incarceration. Another client is Harvey Weinstein, the former Hollywood movie producer convicted twice of rape.

After being sentenced, Weisselberg will likely be driven to Rikers and trade his street clothes for a uniform and sneakers with velcro straps.

Rothfeld said he hopes Weisselberg will be segregated from the general population, and not placed in a dorm with inmates who may not know him but will know his boss, who is seeking the presidency in 2024.

“Certainly Mr. Weisselberg’s 50-year relationship with the former president is on all our minds,” Rothfeld said.

A spokesman for the city’s Department of Correction said the agency’s mission is “to create a safe and supportive environment for everyone who enters our custody.”

Rikers is scheduled to close in 2027.

STAR WITNESS

Weisselberg was the star government witness against his employer.

He told jurors that Trump signed bonus and tuition checks, and other documents at the heart of prosecutors’ case, but was not in on the tax fraud scheme.

Though no longer CFO, Weisselberg remains on paid leave from the Trump Organization. He testified in November that he hoped to get a $500,000 bonus this month.

Weisselberg testified that the company is paying his lawyers. It is paying Rothfeld as well, a person familiar with the matter said. Rothfeld declined to comment.

Trump was not charged and has denied wrongdoing. The Manhattan District Attorney’s office is still investigating his business practices.

Merchan will also sentence the Trump Organization on Friday. Penalties are limited to $1.6 million.

Weisselberg remains a defendant in New York Attorney General Letitia James’ $250 million civil lawsuit alleging that Trump and his company inflated asset values and Trump’s net worth.

Rothfeld said he advised Weisselberg not to go outside at Rikers because of the risk of violence in courtyards, and not to interject himself into conversations between other inmates.

“The goal is to keep to yourself,” Rothfeld said.

Reporting by Karen Freifeld; Editing by Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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Trump Organization found guilty of tax fraud scheme

NEW YORK, Dec 6 (Reuters) – Donald Trump’s real estate company was convicted on Tuesday of carrying out a 15-year-long criminal scheme to defraud tax authorities, adding to the legal woes facing the former U.S. president as he campaigns for the office again in 2024.

The Trump Organization – which operates hotels, golf courses, and other real estate around the world – was found guilty of paying personal expenses for top executives including former chief financial officer Allen Weisselberg, and issuing bonus checks to them as if they were independent contractors.

The company faces up to $1.6 million in fines after being convicted on all charges, including scheming to defraud tax authorities, conspiracy and falsifying business records. Trump was not charged in the case.

Justice Juan Merchan, who presided over the trial in state court in New York, set a sentencing date for Jan. 13.

While the fine is not expected to be material for a company of the Trump Organization’s size, the conviction could complicate its ability to do business.

Weisselberg, 75, testified as the government’s star witness as part of a plea deal that calls for a sentence of five months in jail.

Manhattan District Attorney Alvin Bragg, whose office prosecuted the case, called the verdict “very just.”

“The former president’s companies now stand convicted of crimes,” Bragg said in the New York courthouse after the verdict, speaking of the Trump Corporation and Trump Payroll Corporation, the two units of the Trump Organization which were convicted.

Asked if he regretted not charging Trump in the case, Bragg did not respond.

He has said that the office’s investigation into Trump is continuing.

APPEAL

Alan Futerfas, a lawyer for the Trump Organization, said the company would appeal and that the criminal law governing corporate liability was vague.

“It was central to the case,” he told reporters after the verdict.

The jury deliberated for about 12 hours over two days.

The case centered on charges that the company paid personal expenses like free rent and car leases for executives including Weisselberg without reporting the income, and gave them bonuses as non-employee compensation from other Trump entities like the Mar-a-lago Club, without deducting taxes.

According to testimony during the four-week trial, Trump himself signed the bonus checks annually, paid private school tuition for Weisselberg’s grandchildren, authorized the lease for his luxury Manhattan apartment and approved a salary deduction for another executive.

“The whole narrative that Donald Trump was blissfully ignorant is just not real, prosecutor Joshua Steinglass told jurors during his closing argument on Friday.

He said the “smorgasbord of benefits” was designed to keep top executives “happy and loyal.”

Republican Trump, who on Nov. 15 announced his third campaign for the presidency, said in a statement he was “disappointed” by the verdict but called the case a “Manhattan witch hunt.” Both Bragg and his predecessor who brought the charges, Cyrus Vance, are Democrats.

SEPARATE LAWSUIT

The Trump Organization separately faces a fraud lawsuit brought by New York state Attorney General Letitia James.

Trump himself is being investigated by the U.S. Department of Justice over his handling of sensitive government documents after he left office in January 2021 and attempts to overturn the November 2020 election, which he lost to Democrat Joe Biden.

Lawyers for the Trump Organization argued that Weisselberg carried out the scheme to benefit himself, not the company. They tried to paint him as a rogue employee. Weisselberg is currently on paid leave and testified that he hopes to get another $500,000 bonus in January

Trump wrote on his Truth Social platform on Nov. 19. that his family got “no economic gain from the acts done by the executive.”

Weisselberg, who pleaded guilty in August to concealing $1.76 million in income from tax authorities, testified that although Trump signed checks involved, he did not conspire with him.

He said that the company saved money by paying for his rent, utilities, Mercedes-Benz car leases for him and his wife and other personal expenses rather than raising his salary, because a wage hike would have had to account for taxes.

He said Trump’s two sons – who took over the company’s operations in 2017 – gave him a raise after they knew about his tax dodge scheme.

By then, Trump was president, and the company was preparing for greater scrutiny.

“We were going through an entire cleanup process of the company to make sure that since Mr. Trump is now president everything was being done properly,” Weisselberg testified.

Reporting by Luc Cohen and Karen Freifeld in New York; additional reporting by Andrew Hofstetter in New York; Editing by Noeleen Walder and Grant McCool

Our Standards: The Thomson Reuters Trust Principles.

Luc Cohen

Thomson Reuters

Reports on the New York federal courts. Previously worked as a correspondent in Venezuela and Argentina.

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Vietnam’s Vinfast to build $2 bln electric vehicle factory in U.S.

HANOI/SAN FRANCISCO, March 29 (Reuters) – Vietnam’s automaker VinFast said on Tuesday it has signed a preliminary deal to initially invest $2 billion to build a factory in North Carolinato make electric buses, sport utility vehicles (SUVs) along with batteries for EVs.

The unit of Vietnam’s biggest conglomerate Vingroup (VIC.HM), said it plans to have a total investment of $4 billion in its first U.S. factory complex.

Construction should begin this year as soon as the company gets necessary permits, and is expected to finish by July 2024. The plant’s initial capacity will be 150,000 units per year, Vinfast said.

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“With a manufacturing facility right in the U.S. market, VinFast can stabilize prices and shorten product delivery time, making our EVs more accessible to customers,” said Nguyen Thi Thu Thuy, Vingroup vice chair and VinFast Global CEO.

VinFast has begun taking pre-orders globally for two electric SUVs with a goal to begin delivering them in the fourth quarter.

U.S. President Joe Biden said the VinFast investment, which will create more than 7,000 jobs, is “the latest example of my economic strategy at work.”

“It builds on recent announcements from companies like GM, Ford, and Siemens to invest in America again and create jobs, said Biden, who set an ambitious goal for half of new car sales to be electric by 2030.

This will be North Carolina’s first car plant and it is the largest economic development announcement in the state’s history, the governor’s office said in a statement.

VinFast said prices for its VF8 sport SUV started from $41,000 in the United States. By comparison, a Tesla SUV sells for around $63,000. VinFast is targeting global electric vehicle sales of 42,000 this year.

PRODUCTION IS HARD

VinFast is betting big on the U.S. market, where it hopes to compete with legacy automakers and startups with affordable electric SUVs and a battery leasing model.

Other electric vehicle startups like Rivian and Lucid have slashed their production targets this year due to supply chain disruptions caused by coronavirus, which hit their share prices. read more

Tesla CEO Elon Musk said last year, “It’s insanely difficult to reach volume production at affordable unit cost.”

VinFast, which became Vietnam’s first fully fledged domestic car manufacturer in 2019, plans to transition to all-electric vehicle production from late 2022.

Outside of North America, the company is looking for a plant in Germany, it said in January.

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Reporting by Phuong Nguyen in Vietnam and Hyunjoo Jin in San Francisco; Editing by Chizu Nomiyama and David Gregorio

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Trading in China Evergrande shares, onshore bonds halted pending announcement

The China Evergrande Centre building sign is seen in Hong Kong, China December 7, 2021. REUTERS/Tyrone Siu

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HONG KONG, March 21 (Reuters) – Shares of embattled property developer China Evergrande Group (3333.HK) and onshore bonds issued by its flagship unit Hengda Real Estate Group were suspended from trading on Monday, pending an announcement by the company.

Trading was also halted in shares of its property services unit, Evergrande Property Services Group Ltd (6666.HK), and electric vehicle unit, China Evergrande New Energy Vehicle Group Ltd (0708.HK), exchange filings showed.

The filings gave no further details.

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Evergrande, the world’s most indebted developer with over $300 billion in liabilities, has been struggling to repay its suppliers and creditors and complete projects and homes.

Hengda secured approval from its onshore bondholders over the weekend to delay a coupon payment due last September to September 2022, according to a filing by the company’s lawyer to the Shenzhen Stock Exchange on Sunday.

Hengda held a meeting with creditors of the 4 billion yuan ($629 million) 2025 bond on March 18-19 to approve the payment of interests incurred between September 2020 to September 2021 to be made in September 2023. read more

Evergrande has so far avoided technical bond defaults onshore, though it has missed payments on some offshore bonds.

Evergrande shares traded at HK$1.65 before the suspension. They have gained 3.8% this year after plunging 89% in 2021.

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Reporting by Clare Jim and Donny Kwok in Hong Kong, Beijing newsroom; Editing by Himani Sarkar

Our Standards: The Thomson Reuters Trust Principles.

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Allianz, Swiss Re join other financial firms in turning from Russia

  • Allianz says stopped insuring new business in Russia
  • Swiss Re says not renewing business with Russian clients
  • Europe’s securities regulator says ensuring orderly markets
  • Deutsche changes position late on Friday
  • FTSE Russell ejects four UK-listed, Russia-focused stocks

FRANKFURT/LONDON/ZURICH, March 14 (Reuters) – Allianz (ALVG.DE) and Swiss Re (SRENH.S) said on Monday they were cutting back on Russian business as European financial institutions turn their backs on Russia.

The German insurer and Swiss reinsurer join banks Deutsche (DBKGn.DE), Goldman Sachs (GS.N) and JPMorgan Chase (JPM.N) which have exited Russia following its Feb. 24 invasion of Ukraine and subsequent Western government sanctions.

The moves will pile pressure on others to follow.

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Allianz said it had put a stop to insuring new business in Russia and was no longer investing in Russia for its own portfolio. read more

Swiss Re said it was not taking on new business with Russian and Belarusian clients and was not renewing existing business with Russian clients. In a statement sent via email, Swiss Re said it was reviewing its current business relationships in Russia and Belarus. read more

The decisions follow similar action by other major European insurers and reinsurers, which provide cover for large projects such as energy installations.

Insurer Zurich (ZURN.S) no longer takes on new domestic customers in Russia and will not renew existing local business, a spokesperson told Reuters on Monday.

Hannover Re (HNRGn.DE) said last week that new business and renewals for customers in Russia and Belarus were on hold, while Italian insurer Generali (GASI.MI) said earlier this month it would pull out of Russia. read more

Insurance broker Willis Towers Watson (WTY.F) also said on Sunday it would withdraw from Russia, following similar moves by rivals Marsh (MMC.N) and Aon (AON.N).

Asset managers have said they will not make new investments in Russia and many Russian-focused funds have frozen because they are unable to trade following the sanctions and counter-measures taken by Russia. read more

The European Union’s markets watchdog ESMA said on Monday it was coordinating the bloc’s regulatory response to the Ukraine conflict to ensure markets continued to function in an orderly manner.

Britain’s pensions regulator said the sector had little direct exposure to Russia, but that there were practical difficulties in selling Russian assets. read more

Ukraine said on Monday it had begun “hard” talks with Russia on a ceasefire, immediate withdrawal of troops and security guarantees after both sides reported rare progress in negotiations at the weekend, despite Russian bombardments. read more

Russia calls its actions in Ukraine a “special operation”.

WINDING DOWN

Deutsche, which had faced stinging criticism from some investors and politicians for its ongoing ties to Russia, announced late on Friday that it would wind down its business there. read more

It was a surprise reversal by the Frankfurt-based lender, which had previously argued that it needed to support multinational firms doing business in Russia.

Britain’s London Stock Exchange Group also said late on Friday it was suspending all products and services for all customers in Russia, days after suspending the distribution of news and commentary in the country following new laws in Moscow. read more

Index provider FTSE Russell said on Monday it would delete four UK-listed, Russia-focused companies including Roman Abramovich’s Evraz (EVRE.L) after many brokers refused to trade their shares.

Evraz, along with Polymetal International (POLYP.L), Petropavlovsk (POG.L) and Raven Property Group (RAV.L), would be deleted from all FTSE’s indexes during the March review, it said in a statement.

FTSE Russell said it had received feedback from its External Advisory Committees and market participants that trading in the shares was “severely restricted” as brokers refused to handle the securities, hitting market liquidity. read more

JPMorgan says the majority of forecast risk for European banks from the Russia shock will come from commodity and economic spillover effects, with the sector plunging since the end of February.

European banking stocks (.SX7P) have come off their lows in recent days, however, and rose 3.8% on Monday.

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Additional reporting by Marc Jones, Iain Withers and Joao Manuel Mauricio, Writing by Carolyn Cohn, Editing by Catherine Evans

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Debt-laden China Evergrande to hold call with investors on Wednesday – sources

The company logo is seen on the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song

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HONG KONG, Jan 26 (Reuters) – China Evergrande Group (3333.HK) and its financial advisers will hold a call with investors at 9 pm (1300 GMT) on Wednesday, sources said, the first such call since it defaulted on some dollar bond payments last month.

Evergrande, once China’s top selling real estate developer, has more than $300 billion in liabilities, including nearly $20 billion of international bonds all deemed to be in default.

Its debt crisis has engulfed other Chinese developers and roiled global financial markets over the past year, and contributed to a sharp slump in China’s property market. read more

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Newly appointed company executive director Siu Shawn, who is also the chairman of Evergrande New Energy Vehicle Group Limited (0708.HK), and a member of the property developer’s risk management committee, Chen Yong, will join the call, the sources said, speaking on condition of anonymity.

Chen is a compliance director of state-owned Guosen Securities. Andrew Huang, Evergrande’s Hong Kong branch general manager, will also be present on the call.

Evergrande set up the risk management committee in December with mostly members from state enterprises, as the Guangdong provincial government leads the work on the firm’s restructuring.

The embattled firm on Monday sought more time from its offshore bondholders to work on a “comprehensive” and “effective” debt restructuring plan, after a group of Evergrande’s offshore creditors said they were ready to take “all necessary actions” to defend their rights if the company did not show more urgency to resolve a default. read more

Evergrande has also asked the bondholders to disclose their holdings by mid-this week to identify investors for communications, and hired more financial and legal advisers to follow up with demands from creditors. read more

Shares of Evergrande closed up 1.7% on Wednesday, while its defaulted dollar bond due April 2022 dropped to 15.997 cents on the dollar from 17.074 overnight, according to data by Duration Finance.

Rating agency Moody’s said in a report on Wednesday that covenant packages in Evergrande’s offshore issuances had become increasingly lax, loosening or eliminating key protections, and putting the recovery prospects for offshore bondholders in peril.

Offshore bondholders rank behind the creditors of Evergrande’s over 1,950 onshore subsidiaries, Moody’s added, and none of which guarantee the offshore bonds.

The agency said the weakened covenants and increased size of debt carve-outs have allowed the firm to increase leverage materially.

“Flexible covenants have left Evergrande and other Chinese property developers with a corporate family rating of B3 negative and below vulnerable to the highly cyclical nature of China’s real estate market,” Jake Avayou, a Moody’s vice president and senior covenant officer, said in the report.

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Reporting by Clare Jim in Hong Kong and Jason Xue in Shanghai; Editing by Clarence Fernandez and Kim Coghill

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China’s Evergrande scrambles to avoid new default, Shimao hoists ‘for sale’ sign

A man walks past a wall carrying the logo of Shimao Group, with residential buildings and the financial district of Pudong seen in the background, in Shanghai, China January 1, 2013. Picture taken January 1, 2013. REUTERS/Stringer

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  • Shimao puts assets on the block, ratings slashed again
  • Evergrande extends deadline for bond payment deferral
  • R&F next in focus with $750 mln debt payment on Thursday

HONG KONG/LONDON, Jan 10 (Reuters) – China’s property sector saw more drama on Monday after reports Shimao – investment grade-rated until a couple of months ago – had put all its projects up for sale, and Evergrande attempted to avoid another high-profile default.

More unwelcome surprises this month have meant no let up in the Chinese property crisis that wiped over a trillion dollars off the sector last year.

Monday’s twists saw Shimao Group’s credit rating cut again by both S&P and Moody’s after it unexpectedly defaulted on a “trust loan” last week, although its shares surged nearly 20% (0813.HK) on reports it was in talks about asset sales with state-backed giant China Vanke. read more

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China Evergrande (3333.HK), the world’s most indebted developer that first triggered the turmoil last year, said it had moved out of its Shenzhen headquarters to cut costs. read more

The company kept a glimmer of hope alive that its first “onshore” Chinese yuan bond default might still be avoided by extending until Thursday a deadline for bondholders to agree to a six-month, 4.5 billion yuan ($157 million) payment deferral. read more

Chinese property firms have faced unprecedented pressure over the last six months following efforts by Beijing to curb overborrowing in the sector.

Reuters reported last week that the government now plans to make it easier for state-backed property developers to buy up assets of struggling private rivals. read more

But the sector’s cash crunch is expected to intensify too with firms needing to make nearly $40 billion of international bond payments over the next six months according to brokerage Nomura, including almost $1.5 billion this week alone.

One of those likely to be highlighted alongside Evergrande on Thursday will be Guangzhou R&F Properties (2777.HK). Its bonds have slumped to deeply distressed levels ahead of a $750 million bond payment due that day . It also has a number of unfinished mega projects in global cities like London.

“I think the worst might be yet to come” said Himanshu Porwal, emerging markets corporate credit analyst at Seaport Global.

“A lot will depend on what the Chinese government does in terms of liquidity measures… But it has been four months already so I don’t know what they would be waiting for.”

China high yield crushed by property collapse

NEW LOWS

The woes of recent days have seen ICE’s China high-yield debt index (.MERACYC), which is dominated by homebuilders, hit an all-time low, while Evergrande and fellow-defaulter Kaisa have seen their bonds ejected from J.P. Morgan’s closely followed emerging market corporate debt index.

S&P and Moody’s both cut Shimao’s rating deeper into the junk category on Monday and warned of potential for a further downgrade.

S&P, which had rated Shimao investment grade as recently as November, cut it by a full two notches. It said, “The decline is worse than we previously anticipated. We now assess the company’s liquidity to be weak.”

Moody’s and Fitch also downgraded Yuzhou Group (1628.HK) due to increased refinancing risk while Moody’s withdrew the rating of another firm, Yango, due to “insufficient information.”

Separately, small developer Modern Land (1107.HK), which missed payment for its 12.85% notes due in October said in a filing on Monday that it has received notices from certain noteholders demanding early repayment of their senior notes.

The developer said it has been discussing a waiver with these creditors and has appointed financial advisers to formulate a plan. It is also in talks on a restructuring plan for $1.3 billion of its offshore bonds, the firm added.

Modern Land shares, which resumed trading after being suspended since Oct. 21, sank 40% in Hong Kong to HK$0.23.

“It’s going to be the peak of repayment period and we’ll see more developers default,” said Kington Lin, managing director of the asset management department at Canfield Securities Limited.

“The market is watching how many SOEs (state-owned enterprises) will get more M&A loans to help the developers in distress.”

Chinese property firms face big bills

(This story refiles to add dropped letter in first paragraph)

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Reporting by Clare Jim and Donny Kwok in Hong Kong, Samuel Shen in Shanghai and Marc Jones in London; ; Editing by Kim Coghill, Shri Navaratnam, Tomasz Janowski and Cynthia Osterman

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Developer Shimao’s fire sale, new rating cuts keep China property on edge

A man walks past a wall carrying the logo of Shimao Group, with residential buildings and the financial district of Pudong seen in the background, in Shanghai, China January 1, 2013. Picture taken January 1, 2013. REUTERS/Stringer

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  • Shimao puts all residential, commercial assets on sale – Caixin
  • Evergrande onshore bondholders to decide on extension
  • Some Modern Land offshore bondholders demand early repayment
  • Yuzhou downgraded by rating agencies on higher refinancing risk

HONG KONG, Jan 10 (Reuters) – Shanghai-based developer Shimao has put all its projects on sale, local media reported on Monday, and more Chinese property firms suffered credit rating cuts, leaving markets torn between hopes a stifling cash crunch will begin to ease and fears of a surge in defaults.

Chinese property developers are facing an unprecedented liquidity squeeze due to regulatory curbs on fresh borrowing, leading to a string of offshore debt defaults, credit-rating downgrades and sell-offs in developers’ shares and bonds.

The cash crunch for the sector, which is one of the main contributors to the China’s economic output, is expected to intensify in the days ahead with a wall of repayment obligations looming in the next few months.

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A glimmer of hope stems from steps the authorities have taken recently to provide some relief.

China Evergrande Group (3333.HK), the world’s most indebted developer at the centre of the sector’s debt crisis, is seeking a six-month delay in the redemption and coupon payments of a 4.5 billion yuan ($157 million) bond. read more

The outcome of the company’s proposal after a meeting with the bondholders is expected as soon as Monday.

Evergrande is struggling to repay more than $300 billion in liabilities, including nearly $20 billion of offshore bonds deemed in cross-default by ratings agencies last month after it missed payments. read more

“It’s going to be the peak of repayment period and we’ll see more developers default,” said Kington Lin, managing director of Asset Management Department at Canfield Securities Limited.

Shimao Group Holdings (0813.HK), which defaulted on a trust loan last week, has put on sale all of its real estate projects, including both residential and commercial properties, Caixin reported over the weekend. read more

The developer has struck a preliminary deal with a Chinese state-owned company to sell its commercial property Shimao International Plaza Shanghai for more than 10 billion yuan, the report said.

The company did not respond to a request for comment.

Daiwa predicted in a research report a vicious liquidity cycle given the recent negative news, even though the firm said it was not in debt servicing default.

Shimao unit Shanghai Shimao Construction said on Friday it was in talks with China Credit Trust to resolve a $101 million defaulted loan payment. The missed payment would not accelerate payment requests in the open bond market, it added.

“We believe negative publicity will erode the confidence of home buyers and investors,” Daiwa said.

“This, in turn, would negatively impact Shimao’s future refinancing activities and contract sales prospects and lead to further deteriorating cash flows and liquidity.”

Moody’s Investors Service on Monday cut Shimao corporate family rating deeper into the junk category, citing its “weakening access to funding and large near-term debt maturities” and kept it on review for a further downgrade.

Shimao shares ended up 19% on Monday, but its bonds due in January 2027 was down nearly 20 basis points. An index of China high-yield debt (.MERACYC), which is dominated by developer issuers, hit a new low.

GROWING DEFAULT RISK

The amount of maturing offshore bonds issued by Chinese property developers will almost double from $10.2 billion in the fourth quarter last year to $19.8 billion in this quarter and $18.5 billion in the next, according to brokerage Nomura.

While the risk of more property developers defaulting on their payment obligations has grown, there are some hopes that the recent government measures will help the sector.

Reuters reported last week that China will make it easier for state-backed property developers to buy up distressed assets of debt-laden private peers, another step by policymakers to avert a liquidity crisis in the sector. read more

“The market is watching how many SOEs (state-owned enterprises) will get more M&A loans to help the developers in distress,” Canfield Securities’ Lin said.

For now, however, more developers are getting hit with credit rating cuts.

Moody’s and Fitch downgraded Yuzhou Group Holdings Company Ltd (1628.HK) due to increased refinancing risks.

Separately, small developer Modern Land (1107.HK), which has missed payment for its 12.85% notes due Oct. 25, 2021, said in a filing on Monday it has received notices from certain noteholders demanding early repayment of their senior notes.

The developer said it has been discussing a waiver with these creditors and has appointed financial advisers to formulate a plan. It is also in talks on a restructuring plan for $1.3 billion of its offshore bonds, the firm added.

Modern Land shares, which have been suspended since Oct. 21, sank 40% on Monday to HK$0.23, a historical low.

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Reporting by Clare Jim and Donny Kwok in Hong Kong, Samuel Shen in Shanghai; additional reporting by Marc Jones in London; Editing by Kim Coghill, Shri Navaratnam and Tomasz Janowski

Our Standards: The Thomson Reuters Trust Principles.

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China Evergrande shares halted, set to release ‘inside information’

HONG KONG, Jan 3 (Reuters) – China Evergrande Group (3333.HK) shares will be suspended from trading on Monday pending the release of “inside information”, the embattled property developer said without elaborating.

Evergrande, the world’s most indebted developer, is struggling to repay more than $300 billion in liabilities, including nearly $20 billion of international market bonds that were deemed to be in cross-default by ratings firms last month after it missed payments.

The property developer missed new coupon payments worth $255 million due last Tuesday < VG162759965=>, though both have a 30-day grace period. read more

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The firm has set up a risk management committee with many members from state companies, and said it would actively engage with its creditors. read more

Local media reported over the weekend a city government in the Chinese resort island of Hainan had ordered Evergrande on Dec. 30 to demolish its 39 residential buildings within 10 days, due to illegal construction.

The buildings stretched over 435,000 square meters, the reports added, citing an official notice to Evergrande’s unit in Hainan.

Evergrande did not respond to request for comment on the Hainan development.

On Friday, Evergrande dialled back plans to repay investors in its wealth management products, saying each investor in its wealth management product could expect to receive 8,000 yuan ($1,257) per month as principal payment for three months irrespective of when the investment matures. read more

The move highlights the deepening liquidity squeeze at the property developer.

“The market is watching the asset disposal progress from Evergrande to repay its debt, but the process will take time,” said Conita Hung, investment strategy director at Tiger Faith Asset Management.

“And the demolition order in Hainan will hurt the little homebuyer confidence remained in the company.”

Evergrande said last week 91.7% of its national projects have resumed construction after three months of effort. Many projects were halted previously after the developer failed to pay its many suppliers and contractors. read more

Shares of Evergrande shed 89% last year, closing at HK$1.59 on Friday.

Its EV unit China Evergrande New Energy Vehicle Group (0708.HK)reversed early losses to rise 6% by late morning trades on Monday, while property management unit Evergrande Services (6666.HK) declined 3%.

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Reporting by Clare Jim; Editing by Tom Hogue & Shri Navaratnam

Our Standards: The Thomson Reuters Trust Principles.

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