Debt Investors Tested by Slow Restructuring: Update from Evergrande

Chinese developers are increasing their sales of onshore bonds to fund project construction, a sign that easing government policy is helping ease the sector’s cash crunch.

It comes as the nation’s failing builders are making little headway in restructuring their dollar bills, testing the patience of struggling investors who have stepped in to buy after an industry-wide liquidity crunch. Meanwhile, S&P Global Ratings said the recent auditor resignations of three Chinese developers suggest transparency issues persist in the sector.

A Bloomberg Intelligence gauge of developers gained 1.2% on Wednesday after two days of steep declines, but China’s dollar high-yield bonds erased their lead by mid-afternoon, credit traders said. Zhenro Properties Group Ltd.’s 5.45% onshore bond, due 2024, ended a volatile trading day with a record gain. This followed an initial drop of 25% on fears of not repurchasing a $200 million bond as scheduled in two weeks, which prompted a 30-minute trading halt.

  • Chinese developer bondholders brace for long road to repayments
  • Chinese junk dollar bonds lose morning gains as Shimao slips
  • Chinese AMCs may not be white knights for developer bondholders
  • Hong Kong sells high-end real estate site at record price (1)
  • Cinda and Huarong are banks’ buffers against problematic home loans
  • China Oceanwide Says Lender Appointed Receivers After Unit Defaulted
  • Chinese property bonds buoyed by new guidelines, AMC backing

Moody’s Withdraws RiseSun’s Rating for Insufficient Information (4:25 p.m. HK)

Moody’s Investors Service has removed the Caa2 rating from RiseSun Real Estate Development Co.’s family of companies, according to a statement.

The company said it had “decided to withdraw the rating because it believes it has insufficient or otherwise inadequate information to support maintaining the ratings.”

Builders Sell More Onshore Bonds to Fund Construction (12:32 a.m. HK)

Chinese developers are increasing their sales of onshore bonds to fund project construction, a sign that easing government policy is helping ease the sector’s cash crunch.

China Vanke Co., the country’s second-largest automaker by contracted sales last year, was expected to close its second 3-year, 3 billion yuan ($473 million) bond of 2022 in the domestic interbank market on Wednesday. Proceeds from the two notes will go to construction projects, according to the bond issuance documents.

Chinese Developers’ Auditor Change Signals Governance Risk, S&P Says (12:21 HK)

Recent auditor resignations from three Chinese developers suggest transparency issues persist in this sector, S&P said.

Changing accounting firms just before year-end results raises questions about the quality of a company’s governance, the ratings provider wrote in a report. He added that more developers may face this problem as auditors push back against opaque practices such as the use of off-balance sheet debt.

Jinke plans to sell up to 1.5 bln yuan of 4-year bonds (12:04 a.m. HK)

Jinke Properties Group Co. plans to sell up to 1.5 billion yuan of 4-year bonds at an estimated coupon rate of 7%-8%, according to a statement posted on the Shenzhen Stock Exchange’s website.

Ronshine Leads Early Gains for Chinese Dollar High Yield Bonds (10:38 a.m. HK)

Chinese high-yield dollar bonds rose Wednesday morning after hitting the weakest day in February according to a Bloomberg index.

The 10.5% rating of Ronshine China Holdings Ltd. due on March 1 jumped from what would be a record 11.1 cents to 72.1 cents at 10:06 a.m. in Hong Kong, according to data compiled by Bloomberg, on pace with the highest close since February 10 . .

Zhenro Properties 5.45% 2024 Bond Halted in Shanghai (9:50am HK)

Trading was suspended for 30 minutes, according to a statement from the Shanghai Stock Exchange, after the note fell 25%.

Shares and dollar bonds of the company have plunged in recent days as traders feared the Chinese automaker might redeem a $200 million bond as planned.

Logan Group Adds to 2022 Dollar Bond Buybacks (8:19 a.m. HK)

Logan Group Co. purchased $1 million of its 7.5% note due August 25 from January 14 to February 14. 15, according to a Hong Kong stock exchange filing. The company purchased $21 million of the bond, representing 7% of the principal.

Cinda and Huarong are banks’ buffers against problematic home loans: BI (8:08 a.m. HK)

China’s bad debt managers could help protect 10 Chinese banks from the corrosive effects of 126 billion yuan in problem home loans, wrote Bloomberg Intelligence analyst Francis Chan.

She said lenders could increase home loans this year without taking on disproportionate credit risk after reducing exposure last year, backed by ample collateral and bad debt coverage.

Chinese Developer’s Bondholders Brace for Long Road to Refunds (7:59 a.m. HK)

At least a dozen developers have defaulted on their dollar bonds over the past year, with an estimated $48.9 billion outstanding awaiting debt resolution, according to a Feb. 3 report from Standard Chartered. Plc. Among them, only China Fortune Land Development Co. issued a brief restructuring framework, seven months after defaulting on its dollar note in February 2021. By earlier this month, the company had reached settlements with its creditors on just 20 % of its debt.

China Oceanwide Says Lender Appointed Receivers After Unit Defaulted (8:18 p.m. HK)

China Oceanwide Holdings Ltd. said a lender appointed receivers over shares of a wholly-owned subsidiary after it sent a notice of default.

The company said the creditor was seeking $159.3 million in an acceleration notice, according to a Hong Kong stock exchange filing. The struggling developer said it received a letter dated Monday stating that representatives of Kroll had been appointed receivers over the assets. Oceanwide said it was negotiating with the creditor, OCM Harbor Investments Pte, for an updated repayment plan.

Bond sales boost construction;  Rise in Shares: Evergrande Update

Carol M. Barragan