Tuesday, January 18

Market Focus Shifts to Stronger Real Estate Firms: Evergrande Update

Investor concerns about China Evergrande Group’s debt are shifting to the country’s strongest real estate companies as the sell-off of industry dollar bonds hits higher-quality borrowers.

China’s investment-grade dollar bills weakened further on Monday morning and the debt of some Chinese real estate developers fell as investors saw potential contagion from the real estate industry. Market participants were also on high alert for the risk of further policy changes when the Communist Party launches a major convention this week.

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The 13% dollar note on an Evergrande unit due 2022 that had a coupon due on Saturday was indicated at 22.5 after rising 4.7 cents in the previous two weeks.

Evergrande has likely been making interest payments despite an impending restructuring in order to complete some transactions without creditors’ oversight, distressed debt investor SC Lowy CEO Michel Lowy said in a Bloomberg TV interview.

Key developments:

  • Guangzhou New Home Sales Fall In Most Of China’s Top-Tier Cities
  • Kaisa Fire Sale Shows Property Contagion: What to Watch for in China
  • Sunac Services to Purchase Comm. Sunac management operations for 1.8 billion yuan
  • China Evergrande raised over $ 50 million selling 2 private jets: DJ
  • Shanghai Shimao 3.2% Yuan Bond due 2025 stopped after crash
  • Yango Group extends the deadline for the bond exchange offer until November 12

China’s Bond Path Shifts From Evergrande To Other Big Developers (12:10 AM HK)

Investor concerns are shifting to China’s stronger real estate firms as the sell-off of industry dollar bonds targets higher-quality borrowers.

A dollar bond from China’s largest real estate firm by sales, Country Garden Holdings Co., fell 2 cents to 77.4 cents on Monday morning after falling a record 10.3 last week. China Vanke Co., the second-largest in the country, also slipped. A dollar bill sold by one of its units was pointed down by 96.2 cents after falling 3.2 cents last week, the steepest drop since March 2020.

Yango Group extends the deadline for the bond exchange offer until November 12 (11:35 a.m. HK)

Yango Group is extending the maturity of its dollar bond swap offer by two days to November 12, giving investors more time to back the deal, it said in a statement to the Hong Kong stock exchange. The developer says it may not be able to make principal and interest payments due Nov. 12 on the 2023 bonds offered to the company.

Evergrande’s Recent Bonus Earnings Are Mind-boggling (10:51 a.m. HK)

SC Lowy CEO Michel Lowy said during a Bloomberg TV interview that “I have no doubt that a restructuring will be necessary at some point in the very near future.” Evergrande’s recent bond gains in light of coupon payments reflect “a level of optimism that is kind of mind boggling.”

© 2021 Bloomberg


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