Friday, January 21

China can “contain” the risks; Home Sales Drop: Evergrande Update

The risks posed to the Chinese economy by the China Evergrande Group debt crisis may be contained, according to the central bank, which has stepped up its comments amid more evidence of economic headwinds stemming from the aftermath.

The real estate firm’s troubles “raise a bit of concern,” People’s Bank of China Governor Yi Gang told a virtual meeting of the Group of 30 on Sunday. “Overall, we can contain the risk from Evergrande.” His comments came after the central bank broke its silence on the crisis last week, saying the risks were controllable and unlikely to spread.

Tighter restrictions in the real estate market have slowed construction activity and restricted financing for the sector, hampering growth. Home sales by value fell 16.9% in September from a year earlier, following a 19.7% drop in August, according to Bloomberg calculations based on data from the Office of National Statistics released Monday. . Property stocks on the mainland fell in the report.

Fears of contagion risks have intensified after a surprise default by Fantasia Holdings Group Co. and a warning from Sinic Holdings Group Co. that default was imminent.

Amid signs of growing unrest from authorities, China is loosening restrictions on home loans at some of its largest banks, according to people familiar with the matter. Such action could help reduce the downtrend in the debt market: Nation dollar junk bond prices rose about 3 cents on the dollar on Monday, according to credit traders. That follows Friday’s earnings.

Evergrande’s land real estate unit is scheduled to pay interest on the yuan bonds due Tuesday.

Key developments:

  • China Home Sales Fall 17% As Evergrande Crisis Deters Buyers
  • Evergrande’s warning was also directed at Fantasia: Shuli Ren
  • China Breaks Silence on Evergrande, Says Risks Are Controllable
  • China eases mortgages for the rest of the year amid Evergrande woes
  • The Evergrande unit is scheduled to pay interest on the yuan bond due Tuesday.
  • Hong Kong regulator launches investigation into China’s Evergrande accounting
  • Hui of China Evergrande pledges 500 million shares as collateral
  • Yuexiu pulls out of Evergrande HK building purchase: Reuters

Jiangsu Construction Credit Rating Downgrade on Evergrande Exposure (12:58 PM HK)

Jiangsu Construction Engineering Group’s credit rating was downgraded to A from AA- by China Chengxin International Credit Rating, which cited default risks stemming from its largest client, China Evergrande.

China Properties Says No Payment Has Been Made On Senior Notes (12:18 PM HK)

China Properties Group said it failed to pay its 15% notes due October 15, adding that failure to pay constitutes a default.

China’s Junk Dollar Bonds Recover Further (10:18 a.m. HK)

The price of Chinese high-yield dollar bonds rebounded further on Monday following Friday’s gains. These bills rose about 3 cents on the dollar at the opening on Monday, according to credit operators.

Home Sales Drop 17% As Crisis Discourages Buyers (10:14 a.m. HK)

China’s economy slowed in the third quarter. A decline in residential property lasted last month, as home sales by value fell 16.9% in September from a year earlier, according to Bloomberg calculations based on data from the Office of National Statistics released on Tuesday. Monday.

Falling sales can fuel a vicious cycle by exacerbating developers’ cash shortages and forcing them to offer higher discounts. That, in turn, could lower home prices in a country where people keep a large part of their wealth in real estate.

Citi sees ‘bumpy’ credit bounce in 2022 (9:37 a.m. HK)

Citigroup credit analysts say the outlook for China’s credit market will improve as the government takes steps to ease the pressure, but traders will need to be patient. A rebound in high yield debt is unlikely in the fourth quarter as “investors are reluctant to participate,” according to a recent note.

“A longer-term approach, until 2022, yields a more positive result,” wrote analysts led by Eric Ollom. Investment-grade companies, which are primarily state-owned companies or other “high-quality” issuers, appear to be oversold, they wrote.

China will sell bonds for $ 4 billion, at least from 2018 (8:30 a.m. HK)

China will sell global dollar bonds for the fifth year in a row, a deal that is attracting more scrutiny after the Evergrande crisis rocked the offshore debt market in recent months.

The Finance Ministry plans to raise $ 4 billion from the offering in Hong Kong on Tuesday, a third less than the $ 6 billion in each of the past two years and the lowest since 2018, according to data compiled by Bloomberg.

PBOC’s Yi Says China May ‘Contain’ Evergrande Risk (8:30 am HK)

People’s Bank of China Governor Yi Gang said authorities may contain the risks posed to the Chinese economy and financial system by the Evergrande struggles. He spoke at a virtual meeting of the Group of 30 on Sunday.

Evergrande dollar bond interest terms:

Dollar bonds Coupon expiration date Amount

(A million dollars)

EVERRE 8.25% due in 2022 September 23 83.53
EVERRE 9.5% due in 2024 September 29th 45.17
EVERRE 9.5% due in 2022 October 11th 68.88
EVERRE 10% due in 2023 October 11th 42.5
EVERRE 10.5% due in 2024 October 11th 36.75
TIANHL 13% due 2022 November 6th 41.93
TIANHL 13.75% due in 2023 November 6th 40.56

© 2021 Bloomberg

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