SHANGHAI, Sept 16 (Reuters) – China Evergrande Group’s (3333.HK) main unit, Hengda Real Estate Group Co Ltd, applied on Thursday to suspend trading of its onshore corporate bonds following a downgrade, as the country’s No.2 property developer wrestles with a liquidity crisis.
The application follows repeated trading freezes of the bonds in recent days by the Shanghai and Shenzhen stock exchanges due to volatile trade.
Hengda received notice on Sept. 15 from rating agency China Chengxin International (CCXI) that the bonds’ ratings had been downgraded to A from AA, and that both the bonds ratings and its issuer rating were put on a watch list for further downgrades, it said in a stock exchange filing.
Hengda applied to suspend trade of its onshore corporate bonds for one day, it said. On the resumption of trade on Sept. 17, its Shanghai and Shenzhen exchange-traded bonds will only be traded through negotiated transactions.
A bond trader, who declined to be identified, said that the changes in the trading mechanism were likely aimed at limiting participation and curbing volatility.
“Many companies would adjust the trading mechanism of their bonds ahead of default,” he said.
The company’s January 2023 Shenzhen-traded bond was last quoted at 24.99 yuan on Wednesday, and its Shanghai-traded May 2023 bond traded at 30 yuan.
China Evergrande’s 8.75% June 2025 dollar bond was trading at 29.375 cents on Thursday morning, up about 4 cents from lows on Wednesday, according to financial data provider Duration Finance.
The indebted property developer is scrambling to raise funds to pay its many lenders and suppliers, as it teeters between a messy meltdown with far-reaching impacts, a managed collapse or the less likely prospect of a bailout by Beijing. read more
Worries over possible contagion from Evergrande’s debt crisis have spilled over to other Chinese high-yield issuers. An index of Chinese high-yield dollar debt (.MERACYC) fell to 374.646 on Thursday morning, its lowest level since April 14, 2020.
Reporting by Samuel Shen and Andrew Galbraith; Editing by Jacqueline Wong and Stephen Coates
Our Standards: The Thomson Reuters Trust Principles.
DETROIT, Aug 20 (Reuters) – The investment surge by both new and established automakers in the electric vehicle market is a bonanza for factory equipment manufacturers that supply the highly automated picks and shovels for the prospectors in the EV gold rush.
The good times for the makers of robots and other factory equipment reflect the broader recovery in U.S. manufacturing. After falling post-COVID to $361.8 million in April 2020, new orders surged to almost $506 million in June, according to the U.S. Census Bureau.
Reuters Graphics
Here’s a graphic on U.S. manufacturing new orders: https://tmsnrt.rs/3lVyhlM
New electric vehicle factories, funded by investors who have snapped up newly public shares in companies such as EV start-up Lucid Group Inc (LCID.O) are boosting demand. “I’m not sure it’s reached its climax yet. There’s still more to go,” Andrew Lloyd, electromobility segment leader at Stellantis-owned (STLA.MI) supplier Comau, said in an interview. “Over the next 18 to 24 months, there’s going to be a significant demand coming our way.”
Growth in the EV sector, propelled by the success of Tesla Inc (TSLA.O), comes on top of the normal work manufacturing equipment makers do to support production of gasoline-powered vehicles.
Automakers will invest over $37 billion in North American plants from 2019 to 2025, with 15 of 17 new plants in the United States, according to LMC Automotive. Over 77% of that spending will be directed at SUV or EV projects.
Equipment providers are in no rush to add to their nearly full capacity.
“There’s a natural point where we will say ‘No'” to new business, said Comau’s Lloyd. For just one area of a factory, like a paint shop or a body shop, an automaker can easily spend $200 million to $300 million, industry officials said.
‘WILD, WILD WEST’ “This industry is the Wild, Wild West right now,” John Kacsur, vice president of the automotive and tire segment for Rockwell Automation(ROK.N), told Reuters. “There is a mad race to get these new EV variants to market.” Automakers have signed agreements for suppliers to build equipment for 37 EVs between this year and 2023 in North America, according to industry consultant Laurie Harbour. That excludes all the work being done for gasoline-powered vehicles.
“There’s still a pipeline with projects from new EV manufacturers,” said Mathias Christen, a spokesman for Durr AG (DUEG.DE), which specializes in paint shop equipment and saw its EV business surge about 65% last year. “This is why we don’t see the peak yet.”
Orders received by Kuka AG, a manufacturing automation company owned by China’s Midea Group (000333.SZ), rose 52% in the first half of 2021 to just under 1.9 billion euros ($2.23 billion) – the second-highest level for a 6-month period in the company’s history, due to strong demand in North America and Asia.
“We ran out of capacity for any additional work about a year and a half ago,” said Mike LaRose, CEO of Kuka’s (KU2G.DE) auto group in the Americas. “Everyone’s so busy, there’s no floor space.”
Kuka is building electric vans for General Motors Co (GM.N) at its plant in Michigan to help meet early demand before the No. 1 U.S. automaker replaces equipment in its Ingersoll, Ontario, plant next year to handle the regular work. Automakers and battery firms need to order many of the robots and other equipment they need 18 months in advance, although Neil Dueweke, vice president of automotive at Fanuc Corp’s (6954.T) American operations, said customers want their equipment sooner. He calls that the “Amazon effect” in the industry.
“We built a facility and have like 5,000 robots on shelves stacked 200 feet high, almost as far as the eye can see,” said Dueweke, who noted Fanuc America set sales and market share records last year.
COVID has also caused issues and delays for some automakers trying to tool up.
R.J. Scaringe, CEO of EV startup Rivian, said in a letter to customers last month that “everything from facility construction, to equipment installation, to vehicle component supply (especially semiconductors) has been impacted by the pandemic.”
However, established, long-time customers like GM and parts supplier and contract manufacturer Magna International (MG.TO) said they have not experienced delays in receiving equipment.
Another limiting factor for capacity has been the continuing shortage of labor, industry officials said. To avoid the stress, startups like Fisker Inc (FSR.N) have turned to contract manufacturers like Magna and Foxconn(2354.TW), whose buying power enables them to avoid shortages more easily, CEO Henrik Fisker said. Growing demand, however, does not mean these equipment makers are rushing to expand capacity. Having lived through downturns in which they were forced to make cuts, equipment suppliers want to make do with what they have, or in Comau’s case, just add short-term capacity, according to Lloyd. “Everybody’s afraid they’re going to get hammered,” said Mike Tracy, a principal at consulting firm the Agile Group. “They just don’t have the reserve capacity they used to have.”
Reporting by Ben Klayman in Detroit; additional reporting by Joseph White; Editing by Dan Grebler
Our Standards: The Thomson Reuters Trust Principles.
A logo of China Evergrande Group is displayed at a news conference on the property developer’s annual results in Hong Kong, China March 28, 2017. REUTERS/Bobby Yip/File Photo
HONG KONG, Aug 2 (Reuters) – China’s most indebted property developer Evergrande Group (3333.HK) has agreed to sell stakes in its internet unit HengTen Networks Group Ltd (0136.HK) worth a total of HK$3.25 billion ($418.2 million), an exchange filing showed on Sunday.
Shares of Evergrande declined more than 2% in early trading on Monday on continued worries over its financial health, while HengTen jumped more than 30%. Shares of HengTen resumed trading on Monday after a suspension on Thursday.
Worries over the developer’s debt and the potential for systemic financial risk have intensified after Evergrande said in June its project companies had not paid some commercial paper on time, but it said it was arranging payment.
Fitch downgraded its credit rating on Wednesday, signalling its concern of a potential default. read more
To ease the pressure, Evergrande will sell a 7% stake at HK$3.20 per share to a unit of Tencent Holdings Ltd. for HK$2.07 billion and a 4% stake to an unidentified buyer for HK$1.18 billion. The filing did not give a timing for the sale.
Before the transaction, Evergrande held a 37.55% stake in the company, while Tencent (0700.HK)held 16.9%. Evergrande’s stake will go down to 26.55% and Tencent’s holdings will increase to 23.9% after the sale, the filing showed.
Evergrande has agreed to provide a 5-year loan of HK$2.07 billion to HengTen to support its business development, the company added in the filing.
HengTen’s shares are expected to resume trading on Aug. 2 after being halted on July 29, the filing showed.
($1 = 7.7720 Hong Kong dollars)
($1 = 7.7721 Hong Kong dollars)
Reporting by Marius Zaharia; Additional reporting by Clare Jim; editing by Barbara Lewis and Sonali Paul
Our Standards: The Thomson Reuters Trust Principles.
WASHINGTON, July 31 (Reuters) – A pandemic-related U.S. government ban on residential evictions expired at midnight on Saturday, putting millions of American renters at risk of being forced from their homes.
The expiration was a blow to President Joe Biden, who on Thursday made a last-ditch request to Congress to extend the moratorium, citing the raging Delta variant.
On Friday, the U.S. House of Representatives adjourned without reviewing the tenant protections after a Republican congressman blocked a bid to extend it by unanimous consent until Oct. 18. Democratic leaders said they lacked sufficient support to put the proposal to a formal vote.
The U.S. Senate held a rare Saturday session but did not address the eviction ban. The White House had made clear it would not unilaterally extend the protections, arguing it does not have legal authority to do so following a Supreme Court ruling in June.
More than 15 million people in 6.5 million U.S. households are currently behind on rental payments, according to a study by the Aspen Institute and the COVID-19 Eviction Defense Project, collectively owing more than $20 billion to landlords.
Democratic Senator Elizabeth Warren on Saturday said that in “every state in this country, families are sitting around their kitchen table right now, trying to figure out how to survive a devastating, disruptive and unnecessary eviction.”
Democratic Representative Cori Bush and others spent Friday night outside the U.S. Capitol to call attention to the issue.
Workers break up the furniture left by a renter who was evicted after a 48-hours notice for violating the terms of her lease in Chelsea, Massachusetts, U.S., March 29, 2021. REUTERS/Brian Snyder
She asked how parents could go to work and take care of children if they are evicted. “We cannot put people on the street in a deadly global pandemic,” Bush said on Saturday.
Landlord groups opposed the moratorium, and some landlords have struggled to keep up with mortgage, tax and insurance payments on properties without rental income.
An eviction moratorium has largely been in place under various measures since late March 2020. The ban by the U.S. Centers for Disease Control and Prevention (CDC) went into effect in September 2020 to combat the spread of COVID-19 and prevent homelessness during the pandemic. It has been extended multiple times, most recently through Saturday.
CDC said in June it would not issue further extensions. A CDC spokeswoman confirmed that the moratorium had expired but declined to comment further.
House Speaker Nancy Pelosi, in explaining the need to extend the eviction ban, noted that out of $46.5 billion in rental relief previously approved by Congress, “only $3 billion has been distributed to renters.”
Late Saturday, Pelosi said lawmakers were demanding “the $46.5 billion provided by Congress be distributed expeditiously to renters and landlords.”
Some Democratic lawmakers early Sunday were rallying outside the Capitol to call for the ban’s reinstatement.
Some states like California and New York have chosen to extend eviction moratoriums beyond July 31. Federal agencies that finance rental housing on Friday urged owners of those properties to take advantage of assistance programs and avoid evicting tenants.
Reporting by David Shepardson; Editing by Cynthia Osterman and Raju Gopalakrishnan
Our Standards: The Thomson Reuters Trust Principles.