Friday, January 21

Stocks fall after default; Doubts about Kaisa’s deal: Evergrande update


Shares linked to China Evergrande Group tumbled after the disputed developer was officially tagged as delinquent for the first time.

The company and Kaisa Group Holdings were downgraded to restricted default by Fitch Ratings on Thursday, which cited overdue dollar bond interest payments in the Evergrande case and failed to pay a $ 400 million bond in the Kaisa case. . The latter will likely reject a rescue package worth up to $ 2 billion from a group of bondholders advised by Lazard Ltd., as it would only provide a solution for short-term debt, Debtwire reported Thursday, citing unidentified people.

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Shares of Evergrande fell as much as 3.9% in Hong Kong, while shares of its real estate services company fell 1%. An indicator of real estate stocks fell 0.7%, extending losses this year to 29%. Bonds issued by Evergrande and other high-yielding issuers from China saw little change in Hong Kong on Friday morning as activity slows as it approaches the end of the year, according to credit traders. Kaisa’s shares have been suspended since Wednesday.

Key developments:

  • Evergrande-related stocks tumble when developer declared it in default
  • Evergrande’s largest broker in the compensation system lowers its position
  • Moutai surge shows bull market return: what to watch in China
  • Color Life services apply to resume operations on Friday
  • What to watch in China’s credit markets after the worst defeat of the decade
  • See actions related to Evergrande as a developer declared in default
  • Evergrande restructuring leaves bondholders at the mercy of Beijing
  • Evergrande will be managed in a market-oriented manner, says PBOC’s Yi

Evergrande’s Largest Compensation System Cutoff Position (11:08 a.m. HK)

Haitong International Securities Co., a Chinese broker that owns the largest number of China Evergrande Group shares in Hong Kong’s clearing system, has reduced its position in the debt-laden developer this week.

The broker’s position in Evergrande was reduced by 225 million shares, according to the CCASS system. At the close of Thursday, it reported a position of about 1.88 billion Evergrande shares in the compensation system, or a 14.24% stake in the company, up from 2.11 billion shares last Friday.

Evergrande-related stocks drop when developer declared it as default (10:35 a.m. HK)

Most of the shares linked to China Evergrande Group tumbled after the disputed developer was officially tagged as delinquent for the first time.

Evergrande fell as much as 2.2%, Evergrande Property Services lost 1.1% and Evergrande New Energy Vehicle Group plunged 2.9%. Other Chinese developers listed in Hong Kong fell, with Country Garden Holdings falling as much as 1.5% and Sunac China Holdings falling 3.7%.

Kaisa is unlikely to accept a $ 2 billion deal offered by the group: Debtwire (10:05 a.m. HK)

Kaisa will likely reject a rescue package worth up to $ 2 billion from a group of bondholders advised by Lazard Ltd., as it would only provide a solution for short-term debt, Debtwire reported Thursday, citing people. unidentified.

The proposed package deals only with Kaisa’s $ 400 million note due December 7 and perhaps some other bonds due early next year, two of the people told Debtwire. Some large bondholders have decided not to join the group, and at least two real money funds have recently depleted, the people said.

Moutai surge shows bull market return (8:30 am HK)

The world’s second-largest stock market is showing signs of exuberance for the first time since Chinese policymakers burst a bubble earlier this year.

The FTSE China A50 index of China’s top stocks is up more than 6% in a six-day advance, its highest since February. Its Relative Strength Index is at a 10-month high, a sign of growing momentum.

The gains coincide with two major defaults in the credit market in Evergrande and Kaisa, and it is not a coincidence. The Communist Party has switched to lax mode to limit the consequences of a real estate slowdown, implementing measures to help boost liquidity in the financial system.

Color Life services apply to resumption of operations on Friday (6 AM HK)

Stock trading in Color Life Services, a real estate management company, and majority shareholder Fantasia Group Holdings Ltd. was halted last month pending insider trading announcements, according to separate documents.

Color Life Services also said that its property developer shareholder received a notice from TFI Securities and Futures, alleging that Fantasia has failed to meet its payment obligations of approximately $ 96.98 million, according to a regulatory document.

Evergrande Defaulted as Huge Restructuring Looming (5:29 p.m. HK)

China Evergrande Group has been officially tagged as delinquent for the first time, the latest milestone in a months-long financial drama that will likely culminate in a massive restructuring of the world’s most indebted developer.

Fitch Ratings cut Evergrande to “restricted default” for failing to make two coupon payments at the end of a grace period on Monday, a move that can trigger cross-defaults on the developer’s $ 19.2 billion debt.

The downgrade came minutes after Fitch applied the same default label to Kaisa Group Holdings Ltd., which defaulted on a $ 400 million bond that matured Tuesday. Together, the two companies account for about 15% of outstanding dollar bonds sold by Chinese developers.

A look at Evergrande’s maturity schedule:

Dollar bonds Coupon expiration date Grace period ends Amount

(A million dollars)

TIANHL 13% due in 2022 November 6th 6th of December 41.93
TIANHL 13.75% due in 2023 November 6th 6th of December 40.56
EVERRE 7.5% due in 2023 December 28th January 27th 50.43
EVERRE 8.75% due in 2025 December 28th January 27th 204.77

© 2021 Bloomberg


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