The China Evergrande Centre building sign is seen in Hong Kong, China December 7, 2021. REUTERS/Tyrone Siu/File Photo
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HONG KONG, Dec 30 (Reuters) – Shares of China Evergrande Group (3333.HK) tumbled on Thursday after the embattled real estate developer did not pay offshore coupons due earlier this week.
Evergrande, whose $19 billion in international bonds are in cross-default after missing a deadline to pay coupons earlier this month, had new coupon payments worth $255 million due on Tuesday for its June 2023 and 2025 notes. ,
At least some investors holding the two bonds have not yet received the coupons, according to three sources with knowledge of the matter. Both the payments have a 30-day grace period.
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Evergrande’s shares ended down 9.1% on Thursday, while the benchmark Hang Seng index (.HSI) edged up 0.1%.
Bloomberg News reported earlier that the due date passed with no sign of payment by the property developer.
Evergrande’s Thursday decline wiped out gains from earlier this week, when the market cheered the initial progress made by the firm in resuming construction work.
Company Chairman Hui Ka Yan vowed in a meeting on Sunday to deliver 39,000 units of properties in December, compared with fewer than 10,000 in each of the previous three months. read more
“(The non-payments) show Evergrande is still not doing okay even though it is delivering homes,” said Thomas Kwok, head of equity business of CHIEF Securities in Hong Kong.
The market confidence in Evergrande and the China property sector is weak, as there could be more defaults with many bonds due in January, Kwok added.
Evergrande has more than $300 billion in liabilities and is scrambling to raise cash by selling assets and shares to repay suppliers and creditors.
The fate of Evergrande and other indebted Chinese property companies has gripped financial markets in recent months amid fears of knock-on effects, with Beijing repeatedly seeking to reassure investors.
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Editing by Richard Pullin, Stephen Coates, Shounak Dasgupta and Neil Fullick
Our Standards: The Thomson Reuters Trust Principles.
The logo of China Evergrande Group is seen on the property developer’s headquarters in Shenzhen, Guangdong province, China, Sept. 26, 2021. REUTERS/Aly Song/File Photo
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Hopes of debt restructuring keep floor under Evergrande shares
Evergrande has not yet confirmed default
‘Market will want to wait and see and not give up yet’ -analyst
Trading in shares of Kaisa suspended
HONG KONG, Dec 8 (Reuters) – China Evergrande Group’s shares hit a record low on Wednesday after a missed debt payment deadline put the developer at risk of becoming the country’s biggest defaulter, even as hopes of a managed debt restructuring calmed fears of a messy collapse.
So far, any Evergrande (3333.HK) fallout has been broadly contained, and with policymakers becoming more vocal and markets more familiar with the issue, consequences of its troubles are less likely to be widely felt, market watchers have said.
Failure by Evergrande to make $82.5 million in interest payments due Nov. 6 on some U.S. dollar bonds would trigger cross-default on its roughly $19 billion of international bonds, with possible ramifications on China’s economy and beyond.
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While the 30-day grace period is over, Evergrande has not announced if the bonds have formally defaulted.
The developer did not immediately respond to a Reuters request for comment.
“Without the official announcement, the market will want to wait and see and not give up yet; otherwise Evergrande’s share and bond prices should have tumbled a lot more,” said Steven Leung, director of UOB Kay Hian in Hong Kong.
“The market also wants to wait and see what can be done with local government stepping in now,” Leung added, referring to the move by Evergrande’s home province to help contain the risk.
Evergrande was once China’s top property developer, with more than 1,300 real estate projects. With $300 billion of liabilities, it is now at the heart of a property crisis in China this year that has crushed almost a dozen smaller firms.
Trading in shares of embattled smaller peer Kaisa Group Holdings (1638.HK) was suspended on Wednesday, after a source with direct knowledge of the matter said it was unlikely to meet its $400 million offshore debt deadline on Tuesday. read more
Kaisa, China’s largest holder of offshore debt among developers after Evergrande, had not repaid the 6.5% bond by the end of Asia business hours, the person said, which could push the notes into technical default, triggering cross defaults on its offshore bonds totalling nearly $12 billion.
Kaisa declined to comment.
Bondholders owning over 50% of the notes in question sent the company draft terms of forbearance late on Monday, a source previously told Reuters.
Even in the case of a technical default, Kaisa and offshore bondholders would continue the discussions, two sources with knowledge of the matter said.
SHARES HIT RECORD LOW
Evergrande’s shares, which have given up more than 20% this month, were down 6% in the afternoon at HK$1.72 – lowest since their November 2009 debut. The broader market (.HSI) was steady.
Its notes due last month , one of two tranches with a coupon payment deadline that passed on Monday, traded at 18.613 cents on the dollar, Duration Finance data showed, versus 18.875 from the close of Tuesday Asia hours.
Kaisa’s bond due April 2022 traded at 36.397, little changed from the day earlier but down from 37.89 last week.
The government has repeatedly said Evergrande’s problems can be contained and moves to boost liquidity in the banking sector along with the firm’s plans to forge ahead with a restructuring of its overseas debt have helped reassure global investors.
The provincial government of Guandong, where Evergrande is based, stepped in last week to help manage the fallout, reinforcing the view that its failure would be managed.
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Reporting by Anne Marie Roantree and Donny Kwok; Editing by Himani Sarkar
Our Standards: The Thomson Reuters Trust Principles.
SINGAPORE, Dec 7 (Reuters) – Asian shares staged a recovery on Tuesday on receding worries about the impact of the Omicron variant while Chinese markets were supported by the central bank easing monetary policy.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) advanced 1.3% and was on course for its biggest jump in two months, after declining on Monday to the lowest level in one year.
Euro Stoxx 50 futures rose 0.5% and FTSE futures put on 0.08% in early trade, indicating a firm market open after European stocks ended higher on Monday.
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China’s CSI300 index (.CSI300) gained 0.6% and Hong Kong’s Hang Seng Index (.HSI) advanced 1.7% as the central bank freed up $188 billion in liquidity through a policy easing. read more
“With this cut, policymakers are demonstrating a more forceful approach to prevent an all-out property market rout,” David Chao, global market strategist, Asia Pacific, ex-Japan, at Invesco said in a note.
The People’s Bank of China said on Monday it would cut the amount of cash that banks must hold in reserve, its second such move this year, releasing the funds in long-term liquidity to bolster slowing economic growth.
China is in a mid-cycle slowdown and the RRR cut is exactly what the economy needs to get back on track, said Chao. “It’s feasible that more RRR cuts are in store over the next year in order to stabilize growth,” he added.
Elsewhere, Australia’s S&P/ASX200 (.AXJO) rose 0.95%, while Japan’s Nikkei (.N225) advanced 2.1% as risk-on sentiment pushed markets higher.
MSCI’s main Asia ex-Japan benchmark has lost about 5% so far this year, with Hong Kong markets figuring among the big losers, while Indian (.BSESN) and Taiwanese stocks (.TWII) outperformed.
Shares in embattled developer Evergrande (3333.HK) edged up 1.7% after hitting a record low on Monday as markets awaited to see if the real estate giant has paid $82.5 million with a 30-day grace period coming to an end.
Elsewhere, markets were supported by gains on Wall Street, where economically sensitive stocks outperformed.
“While epidemiologists have rightly warned against premature conclusions on Omicron, markets arguably surmised that last week’s brutal sell-off ought to have been milder,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a note.
“After all, early assessments of Omicron cases have been declared mild, spurring half-full relief.”
Omicron has spread to about a third of U.S. states, but the Delta version accounts for the majority of COVID-19 infections in the United States, health officials said on Sunday. read more
Dr. Anthony Fauci, the top U.S. infectious disease official, told CNN it does not look like Omicron has a “great degree of severity.”
Stocks on Wall Street closed higher on Monday.
The risk-on mood also helped the dollar climb against safe haven currencies such as the Japanese yen, , which lost 0.6% overnight, while the risk-friendly Australian dollar also found buyers.
Also supporting the dollar was the expectation the Federal Reserve will accelerate the tapering of its bond-buying program when it meets next week in response to a tightening labour market.
Oil prices ticked higher, consolidating a nearly 5% rebound the day before as concerns about the impact of the Omicron variant on global fuel demand eased.
Brent crude futures strengthened 0.9% to $73.7 a barrel, after settling 4.6% higher on Monday.
Gold prices were steady at $1,778.5 per ounce on expectations U.S. consumer price data due later this week will show inflation quickening.
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Reporting by Anshuman Daga; Editing by Sam Holmes and Lincoln Feast.
Our Standards: The Thomson Reuters Trust Principles.
The company logo is seen on the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song/File Photo
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HONG KONG/SHANGHAI, Dec 7 (Reuters) – Some offshore bondholders of China Evergrande Group (3333.HK) did not receive coupon payments by the end of a 30-day grace period, four people with knowledge of the matter said, pushing the cash-strapped property developer closer to formal default.
Failure to make $82.5 million in interest payments that were due last month would trigger cross-default on the firm’s roughly $19 billion of international bonds and put the developer at risk of becoming China’s biggest-ever defaulter – a possibility that has loomed over the world’s second-largest economy for months.
Once China’s top property developer, with over 1,300 real estate projects and $300 billion of liabilities, Evergrande has been the poster child of a property crisis in China this year that has already ripped down nearly a dozen smaller developers.
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The government has repeatedly said Evergrande’s problems can be contained and moves to boost liquidity in the banking sector along with the firm’s plans to forge ahead with a restructuring of its overseas debt have helped reassure global investors.
“The market already had certain expectations about this (non-payment)”, said strategist Kenny Ng at Everbright Sun Hung Kai Securities. It “just waited to see when this will happen”.
“At the same time, investors are watching the development of Evergrande, including whether it is heading for debt restructuring or its creditor repayment plan,” Ng said.
On Monday, the developer said it had established a risk-management committee that included officials from state entities to assist in “mitigating and eliminating the future risks”. read more
That came after it earlier said creditors had demanded $260 million and that it could not guarantee funds to repay debt. That prompted authorities to summon its chairman and reassure markets that broader risk could be contained. read more
So far, any Evergrande fallout had been broadly contained in China and with policymakers becoming more vocal and markets more familiar with the issue, consequences of Evergrande’s troubles are less likely to be widely felt, market watchers have said. read more
State involvement and hope of managed debt restructuring helped lift Evergrande stock as much as 8.3% a day after diving 20% to a record closing low. Still, it ended Tuesday up only 1.1% while its bonds continued to trade at distressed levels.
Notes due Nov. 6, 2022, – one of two tranches with a coupon payment deadline that passed Monday midnight in New York – traded at 18.282 cents on the dollar, Duration Finance data showed, little changed from a day earlier.
SELL OFF
Founded in 1996, Evergrande epitomised a freewheeling era of borrowing and building. That business model was scuttled, however, by hundreds of new rules designed to curb developers’ debt frenzy and promote affordable housing.
Evergrande became just one of a number of developers subsequently starved of liquidity, prompting offshore debt default and credit-rating downgrades, and a plunge in the value of developers’ stocks and bonds.
Smaller peer Kaisa Group Holdings Ltd (1638.HK) – China’s largest offshore debtor among developers after Evergrande – also risks defaulting on a $400 million bond maturing on Tuesday having failed to make a deal with bondholders.
To avoid an overall default, bondholders owning over 50% of the 6.5% notes due Dec. 7 sent Kaisa draft terms of forbearance late on Monday to work toward a solution, a person with direct knowledge of the matter old Reuters. Kaisa started discussing forbearance with bondholders last week, the person said.
Another person with direct knowledge said discussions are at preliminary stages and that it will take time to finalise terms.
The people declined to be identified as the information was confidential.
Responding to Reuters’ request for comment, Kaisa said it is open to discussion on forbearance, without elaborating.
Sources previously told Reuters that the bondholders, had offered Kaisa $2 billion in funding last month but that no major progress on the offer was made. read more
Shares of Kaisa – the first Chinese developer to default on an offshore bond in 2015 – rose 1.1% on Tuesday.
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Reporting by Clare Jim and Scott Murdoch in Hong Kong and Andrew Galbraith in Shanghai; Editing by Sumeet Chatterjee and Christopher Cushing
Our Standards: The Thomson Reuters Trust Principles.
Evergrande says no guarantee it can make $82.5 mln debt payments
Says creditors have also demanded $260 mln repayment
Authorities summon chairman; shares drop 15% to 11-year low
Any collapse could ripple through property sector and beyond
HONG KONG, Dec 6 (Reuters) – After lurching from deadline to deadline, China Evergrande Group (3333.HK) is again on the brink of default, with pessimistic comments from the property developer raising expectations of direct state involvement and a managed debt restructuring.
Having made three 11th-hour coupon payments in the past two months, Evergrande will again face the end of a 30-day grace period on Monday, with dues this time at $82.5 million.
But a statement late on Friday saying creditors had demanded $260 million and that it could not guarantee enough funds for coupon repayment prompted authorities to summon its chairman – and wiped over a sixth off its stock’s market value on Monday.
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Evergrande was once China’s top-selling developer but is now grappling with more than $300 billion in liabilities, meaning a collapse could ripple through the property sector and beyond.
Its statement on Friday was followed by one from authorities in its home province of Guangdong, saying they would send a team to Evergrande at the developer’s request to oversee risk management, strengthen internal control and maintain operations.
The central bank, banking and insurance regulator and securities regulator also released statements, saying risk to the broader property sector could be contained.
Short-term risk from a single real estate firm will not undermine market funding in the medium or long term, said the People’s Bank of China. Housing sales, land purchases and financing “have already returned to normal in China”, it said.
Analysts said authorities’ concerted effort signalled Evergrande has likely already entered a managed debt-asset restructuring process to reduce systemic risk.
Morgan Stanley in a report said such a process would involve coordination between authorities to maintain normal operation of property projects, and negotiation with onshore creditors to ensure financing for projects’ development and completion.
Regulators would also likely facilitate debt restructuring discussion with offshore creditors after business operations start to stabilise, the U.S. investment bank said.
After the flurry of statements, Evergrande’s stock slid as much as 15% on Monday to HK$1.92 – its lowest since May 2010.
Its November 2022 bond – one of two bonds that could go into default on non-payment on Monday – was trading at the distressed price of 20.787 U.S. cents on the dollar, compared with 20.083 cents at the end of Friday.
LIQUIDITY SQUEEZE
Evergrande has been struggling to raise capital by disposing of assets, and the government has asked Chairman Hui Ka Yan to use his wealth to repay company debt. read more
The firm is just one of a number of developers facing an unprecedented liquidity squeeze due to regulatory curbs on borrowing, causing a string of offshore debt defaults, credit-rating downgrades and sell-offs in developers’ shares and bonds.
To prevent further turmoil, regulators since October have urged banks to relax lending for developers’ normal financing needs and allowed more real estate firms to sell domestic bonds. read more
To free up funds at banks, Premier Li Keqiang on Friday said China will cut the bank reserve requirement ratio (RRR) “in a timely way” to increase support for the real economy. read more
Still, the government may have to significantly step up policy-easing measures in the spring to prevent a sharp downturn in the property sector, Japanese investment bank Nomura said in a report published on Sunday.
CONTAGION
Smaller developer Sunshine 100 China Holdings Ltd (2608.HK) on Monday said it had defaulted on a $170 million U.S. dollar bond due Dec. 5 “owing to liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment and the real estate industry”. read more
The delinquency will trigger cross-default provisions under certain other debt instruments, the developer said.
Its shares fell nearly 3%.
Last week, Kaisa Group Holdings Ltd (1638.HK) – the largest offshore debtor among Chinese developers after Evergrande – said it had failed to secure approval from offshore bondholders to carry out an exchange offer of its 6.5% offshore bonds due Dec. 7 , without which it said it would risk default.
The developer has begun talks with some of the offshore bondholders to extend the deadline for the $400 million debt repayment, sources have told Reuters. read more
Smaller rival China Aoyuan Property Group Ltd (3883.HK) last week also said creditors have demanded repayment of $651.2 million due to a slew of credit-rating downgrades, and that it may be unable to pay due to a lack of liquidity. read more
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Reporting by Clare Jim in Hong Kong; Additional reporting to Shuyan Wang in Beijing; Editing by Anne Marie Roantree and Christopher Cushing
Our Standards: The Thomson Reuters Trust Principles.
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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Evergrande says may not have enough funds to meet obligations
China central bank, regulators step in to try to reassure market
BEIJING, Dec 3 (Reuters) – China’s Guangdong province on Friday summoned the chairman of China Evergrande Group (3333.HK) after the real estate developer said there was “no guarantee” it would have enough funds to meet debt repayments, while regulators sought to reassure markets.
Evergrande, once China’s top-selling developer, is grappling with more than $300 billion in liabilities, fuelling fears of a potential collapse that could send shockwaves through the country’s property sector and beyond.
On Friday, the company said in a filing to the Hong Kong stock exchange it had received a demand from creditors to pay about $260 million. It is already late paying $82.5 million in coupons due on Nov. 6. read more
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“In light of the current liquidity status … there is no guarantee that the group will have sufficient funds to continue to perform its financial obligations,” Evergrande said, adding that creditors may demand accelerated repayment if it does not.
That prompted the government of Guangdong, where the company is based, to summon Evergrande Chairman Hui Ka Yan.
The provincial government said in a statement it would – at Evergrande’s request – send a working group to the company to oversee risk management, strengthen internal controls and maintain normal operations.
The Guangdong authorities were not the only government entity to wade into the Evergrande issue on Friday.
In a series of apparently coordinated statements late in the evening, China’s central bank, banking and insurance regulator and its securities regulator sought to reassure the market that any risks to the broader property sector could be contained.
“Evergrande’s problem was mainly caused by its own mismanagement and break-neck expansion,” the People’s Bank of China said.
Short-term risks caused by a single real estate firm will not undermine market fundraising in the medium and long term, it said, adding that housing sales, land purchases and financing “have already returned to normal in China.”
The China Banking and Insurance Regulatory Commission (CBIRC) said the Evergrande issue would not affect the industry’s normal operations and it would increase support for guaranteed rental housing.
It added that it believed domestic and overseas regulators would deal with Evergrande-related issues fairly, while the China Securities Regulatory Commission (CSRC) said any fallout for the capital market was “controllable” and it would maintain support for property developers’ funding needs.
In its filing, Evergrande said it intended to actively engage with creditors to come up with a “viable restructuring plan” to deal with its offshore debts.
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Reporting by Beijing Newswroom and Arundhati Dutta in Bengaluru; additonal reporting by Sumeet Chatterjee in Hong Kong; Writing by Tom Daly; Editing by Sriraj Kalluvila, Louise Heavens and Emelia Sithole-Matarise
Our Standards: The Thomson Reuters Trust Principles.
A sign of the Kaisa Plaza, a real estate property developed by Kaisa Group Holdings, is seen near its apartment building in Beijing, China December 1, 2021. REUTERS/Tingshu Wang
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Kaisa $400 million 6.5% notes due on Dec. 7
Kaisa still looking at asset sales, extending debt
Evergrande’s 30-day grace period for missed coupon on Dec. 6
Dec 3 (Reuters) – Chinese property developer Kaisa Group Holdings Ltd (1638.HK) said on Friday it failed to secure the minimum 95% approval it needed from offshore bondholders to extend the maturity of a $400 million note due next week, raising the risk of a default.
With the Chinese property sector gripped by an unprecedented liquidity squeeze, Kaisa now faces the possibility of defaulting on its 6.5% offshore bonds due Dec. 7 and drawing renewed focus on other developers also staring at a wall of offshore debt maturing over the next few months.
Kaisa had hoped to exchange the $400 million 6.5% offshore bonds for new notes due June 6, 2023 at the same interest rate if at least 95% of holders accepted. It did not disclose how many bondholders had consented to the offer.
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Shares of the embattled property firm dropped 9.8% to a record low of HK$0.92, taking the stock’s plunge so far this year to around 75%.
The firm, which became the first Chinese property developer to default on its dollar bonds in 2015, said it had been in talks with representatives of certain bondholders, but no “legally binding agreement” had been entered into yet.
“To ease the current liquidity issue and reach an optimal solution for all stakeholders, the company is assessing and is closely monitoring the financial condition and cash position of the group,” it said on Friday.
It added that it still exploring selling assets and extending or renewing debt obligations, but cautioned there was no guarantee it would be able to meet the Dec. 7 maturity.
A failure to repay or reach an agreement with creditors would have “a material adverse effect” on Kaisa’s financial condition, it said.
Kaisa is the second-largest dollar bond issuer among China’s property developers after China Evergrande Group (3333.HK), which has more than $300 billion in liabilities, and like the others has been scrambling to raise capital to stave off a default.
Reuters reported last month that the firm was looking to sell its Hong Kong-listed property management unit, Kaisa Prosperity Holdings Ltd (2168.HK).
Last week, in its notes exchange offer, Kaisa said it could consider a debt restructuring exercise if bondholders did not approve the extension of maturity.
Kaisa’s failure in getting a much-needed lifeline from its creditors will also weigh on other smaller developers that are looking to avoid long and messy litigation and restructuring processes, analysts have said.
Also on the horizon is the end of a 30-day grace period for Evergrande, which has been narrowly avoiding defaults, after it failed to pay coupons totalling $82.5 million due on Nov. 6.
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Reporting by Sameer Manekar in Bengaluru; Writing by Sumeet Chatterjee and Nikhil Kurian Nainan; Editing by Shri Navaratnam and Christopher Cushing
Our Standards: The Thomson Reuters Trust Principles.
Phu Quoc resort island is seen via the window of an airplane after the Vietnamese government eased the lockdown following the coronavirus disease (COVID-19) outbreak, Phu Quoc Island, Vietnam May 8, 2020. Picture taken May 8, 2020. REUTERS/James Pearson
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HANOI, Nov 20 (Reuters) – Two hundred vaccinated foreign tourists arrived in Vietnam’s beach-fringed island of Phu Quoc on Saturday, the first wave of visitors to the country in nearly two years as it seeks to resurrect its pandemic-ravaged tourism economy.
Vietnam imposed tight border controls at the start of the pandemic in an effort to keep out COVID-19, with some initial success, but that harmed its burgeoning tourism sector, which typically accounts for about 10% of gross domestic product.
Vaccinated tourists now do not have to undergo mandatory two-week quarantine, according to the authorities, but are required to enjoy their holiday only inside the mega complex resort Vinpearl and will be tested twice during their trip.
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“This is the first and vital step to revive our tourism sector and to prepare for the full resumption next year,” Nguyen Trung Khanh, chairman of the country’s tourism administration said in statement.
“We want to offer tourists a new experience amid new normalcy which they can live fully in Phu Quoc and then live fully in Vietnam,” Khanh added.
The island’s authorities expect to welcome 400,000 domestic and international tourists to the end of this year.
Other Vietnamese destinations such as the UNESCO world heritage site Hoi An and Danang beach are also welcoming international tourists back.
The move follows similar steps taken by neighbouring Thailand, which hosted vaccinated foreign tourist for quarantine-free holiday earlier this month.
Foreign arrivals to Vietnam slumped from 18 million in 2019, when tourism revenue was $31 billion, or nearly 12% of its gross domestic product, to 3.8 million last year.
Vietnam, which has inoculated more than half of its 98 million people, is seeking to resume international commercial flights from January next year and eyeing a full tourism reopening from June.
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Editing by Michael Perry
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A man rides an electric bicycle past the construction site of Guangzhou Evergrande Soccer Stadium, a new stadium for Guangzhou FC developed by China Evergrande Group, in Guangzhou, Guangdong province, China September 26, 2021. REUTERS/Aly Song/File Photo
Evergrande due to pay $148 mln bond coupon on Wednesday
Shares of developer Fantasia plunge 50% after missing payment
S&P downgrades Shimao Group to “BB+” from “BBB-“
SHANGHAI/HONG KONG, Nov 10 (Reuters) – Cash-strapped China Evergrande Group (3333.HK) faced a Wednesday deadline for making an offshore bond payment, while a credit rating downgrade on another property firm added to mounting concerns about a liquidity squeeze in the sector.
Evergrande, the world’s most indebted developer, has been stumbling from deadline to deadline in recent weeks as it grapples with more than $300 billion in liabilities, $19 billion of which are international market bonds.
The company has not defaulted on any of its offshore debt obligations, but another overdue $148 million bond payment must be made on Wednesday. There was no word on that payment as of early afternoon Asia time.
The developer, which also has coupon payments totalling more than $255 million on its June 2023 and 2025 bonds on Dec. 28, declined to comment when contacted by Reuters about its Wednesday payment deadline. read more
China’s property woes rattled global markets in September and October. There was a brief lull in mid-October after Beijing tried to reassure markets the crisis would not be allowed to spiral out of control. read more
But concerns have resurfaced, with the U.S. Federal Reserve warning on Tuesday that China’s troubled property sector could pose global risks.
More developers are seeing their credit ratings slashed on their worsening financial profiles.
S&P Global Ratings said on Wednesday it had downgraded property developer Shimao Group Holdings’ (0813.HK) rating to “BB+” from “BBB-” over concerns that tough business conditions would hinder the company’s efforts to reduce debts.
S&P considers a rating under “BBB-” to be speculative grade.
Worries over the potential fallout from Evergrande have also roiled China’s property sector in recent days, slamming the bonds of real estate companies amid worries the crisis could spread to other markets and sectors.
Shares of developer Fantasia Holdings (1777.HK) plunged 50% on Wednesday after it said there is no guarantee it will be able to meet its other financial obligations following a missed payment of $205.7 million that was due Oct. 4.
FINANCING OPTIONS
Underlining the liquidity squeeze, some real estate firms disclosed plans to issue debt in the inter-bank market at a meeting with China’s inter-bank bond market regulator, the Securities Times reported on Wednesday. read more
In the near future, real estate companies will issue bonds in the open market for financing, while banks and other institutional investors will assist via bond investment, said the paper.
Debt-laden developers including Evergrande and peer Kaisa Group (1638.HK) have also been looking to raise cash to repay their many creditors by selling some of their property and other business assets.
Beijing has been prodding government-owned firms and state-backed property developers to purchase some of Evergrande’s assets to try to control the fall. read more
Rising concerns about the developers’ woes spreading to other sectors was visible on Wednesday as the spread, or risk premium, between lower risk, investment grade Chinese firms and U.S. Treasuries widened to a more than five-month high. (.MERACCG)
Despite the debt woes of Evergrande, its electric vehicles (EV) unit is pushing ahead with its business plan. The unit is seeking Chinese regulatory approval to sell its inaugural Hengchi 5 sport-utility vehicles. read more
China Evergrande New Energy Vehicle Group Ltd (0708.HK) plans to sell HK$500 million ($64 million) worth of shares to fund production of new energy cars.
Shares in Evergrande were little changed from previous close on Wednesday afternoon, while the EV unit was up 2.2%.
Founded in Guangzhou in 1996, Evergrande epitomised a freewheeling era of borrowing and building. But that business model has been scuttled by hundreds of new rules designed to curb developers’ debt frenzy and promote affordable housing.
Any prospect of Evergrande’s demise raises questions over more than 1,300 real estate projects it has in some 280 cities.
Reporting by Andrew Galbraith in Shanghai and Clare Jim in Hong Kong; Writing by Sumeet Chatterjee and Ira Iosebashvili; Editing by Stephen Coates and Lincoln Feast.
Our Standards: The Thomson Reuters Trust Principles.
The company logo is seen on the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song
HONG KONG/SHANGHAI, Nov 8 (Reuters) – Some holders of offshore bonds issued by a unit of developer China Evergrande Group (3333.HK) had not received interest payments due on Nov. 6 by Monday morning in Asia, two people familiar with the matter said.
Scenery Journey Ltd was due to make semi-annual coupon payments on Saturday worth a combined $82.49 million on its 13% November 2022 and 13.75% November 2023 U.S. dollar bonds. ,
Non-payment of interest by Nov. 6 would have kicked off a 30-day grace period for payment.
Twice in October, Evergrande narrowly averted catastrophic defaults on its $19 billion worth of bonds in international capital markets by paying coupons just before the expiration of their grace periods.
One such period expires on Wednesday, Nov. 10, for more than $148 million in coupon payments that had been due on Oct. 11. Evergrande is also due to make coupon payments totalling more than $255 million on its June 2023 and 2025 bonds on Dec. 28.
A spokesperson for Evergrande did not immediately respond to a request for comment. The sources could not be named as they were not authorised to speak to the media.
Reuters was unable to determine whether Evergrande has told bondholders what it planned to do regarding the coupon payment due on Saturday.
BONDS, SHARES FALL
Evergrande’s shares edged lower on Monday, finishing the morning down 0.9%. They have fallen nearly 85% this year. Duration Finance data showed the company’s dollar bonds continuing to trade at discounts of about 75% from their face value on Monday.
Once China’s top-selling developer, Evergrande has been reeling under more than $300 billion in liabilities, and its liquidity woes have reverberated across the country’s $5 trillion property sector, prompting a string of offshore debt defaults, credit rating downgrades and sell-offs in the developers’ shares and bonds in recent weeks.
Spreads on Chinese corporate high-yield dollar debt (.MERACYC) widened to record highs on Friday, and on Monday Shanghai Stock Exchange data showed developers’ bonds once again dominating the list of the day’s biggest losers. One yuan bond issued by an onshore unit of Shimao Group (0813.HK) was suspended from trade after falling more than 34%.
Falls even extended to investment-grade names. Tradeweb data showed a 4.75% January 2030 bond issued by a unit of Sino-Ocean Group Holding (3377.HK) fell nearly 15% on Monday to just above 75 cents. Sino-Ocean is rated “BBB-” by Fitch Ratings and has a “Baa3” rating from Moody’s Investors Service.
Nomura economists Ting Lu and Jing Wang said in a note that they expected “much higher” repayment pressures on developers in the coming quarters, almost doubling from $10.2 billion in the fourth quarter of 2021 to $19.8 billion and $18.5 billion in the first and second quarters of 2022, respectively.
“With the worsening property sector, we might see a rebound of defaults onshore by developers, and bond prices in onshore and offshore markets may increasingly impact one another as investors are on alert,” they said.
“We believe regulators are likely to step up efforts to avoid rising defaults in China’s (offshore commercial dollar bond) market.”
Regulators in October told developers to proactively prepare for repayment of both principal and interest on their foreign bonds and to “jointly maintain their own reputations and the overall order of the market.” read more
Reporting by Clare Jim and Andrew Galbraith; Editing by Muralikumar Anantharaman
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