China property sector woes deepen as markets await Evergrande deal

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HONG KONG, Oct 5 (Reuters) – As buyers had been abuzz on Tuesday with cash-strapped China Evergrande Group’s attainable sale of a stake in a unit to boost as a lot as $5 billion, extra Chinese property builders grappled with rankings downgrades on worries about their potential to repay debt.

Evergrande (3333.HK) is dealing with one of many nation’s largest-ever defaults because it wrestles with greater than $300 billion of debt. The firm final month missed making coupon funds on two greenback bond tranches.

The attainable collapse of one in every of China’s greatest debtors has triggered worries about contagion dangers to the property sector on this planet’s second-largest financial system, as its debt-laden friends are hit with ranking downgrades on looming defaults.

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Chinese developer Sinic Holdings (Group) Co Ltd (2103.HK) grew to become the newest to be downgraded by Fitch Ratings on Tuesday on uncertainty over the reimbursement of its $246 million bonds maturing Oct 18.

Sinic’s long-term issuer default ranking was reduce to ‘C’ from ‘CCC’, and got here after the corporate introduced that sure subsidiaries have missed curiosity funds on onshore financing preparations, Fitch mentioned in its report.

Sinic couldn’t instantly be reached by Reuters for remark.

The transfer comes amid persistent uncertainty over the destiny of Evergrande, as soon as China’s top-selling developer and now set to be one of many nation’s greatest restructuring workouts.

The firm on Monday requested a halt within the buying and selling of its shares in Hong Kong pending an announcement a couple of main transaction. Evergrande Property Services Group (6666.HK), a spin-off listed final 12 months, additionally requested a halt and mentioned it referred to “a possible general offer for shares of the company.”

China’s state-backed Global Times mentioned Hopson Development (0754.HK) was the client of a 51% stake within the property enterprise for greater than HK$40 billion ($5.1 billion), citing unspecified different media experiences. Hopson additionally mentioned it had suspended its shares, pending an announcement associated to a serious acquisition of a Hong Kong-listed agency and a attainable obligatory provide.

A spokesperson for Evergrande didn’t instantly reply to a request for remark.

Separately, Chinese homebuilder Fantasia Holdings’ (1777.HK) dollar-denominated bonds misplaced practically half their market worth in a large Monday selloff, after it mentioned it had did not make a $206 million worldwide market debt cost on time.

In an announcement, the property developer mentioned it’s going to assess the potential influence of the non-payment on the group’s monetary circumstances.

An index of China high-yield debt (.MERACYC), which is dominated by developer issuers, hit its lowest because the pandemic drawdown in 2020 on Monday, and has misplaced virtually 20% since May – whereas comparable U.S. and European indexes have rallied.

Reporting by Clare Jim; Writing by Sumeet Chatterjee
Editing by Shri Navaratnam

Police officers and security personnel walk outside the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China, September 30, 2021. REUTERS/Aly Song