Monday, January 24

Country Garden crash weighs on real estate: Evergrande update

Shares in Country Garden Holdings Co. fell for a third day after China’s largest developer failed to earn enough interest for a $ 300 million convertible bond, hurting other higher-rated real estate firms amid concerns from contagion.

The stock is on its way to its worst week since September, while a 2024 dollar bond is also at an all-time low.

Shares in China Evergrande Group gained after it avoided what would have been its first public bond default on land. The stock rose as much as 2.5% after three days of declines. An Evergrande unit said it obtained investor support to delay prepayment of a 4.5 billion yuan ($ 707 million) promissory note.

Sunac China Holdings Ltd. said late Thursday that its $ 580 million share sale was a precautionary measure and that it had no plans to raise more funds in the stock market in the near future. China’s third-largest builder sold shares at a 15% discount to help pay off some loans.

Key developments:

  • China’s real estate market braces for state-dominated ‘age of rust’
  • Chinese builder Logan denies owning private debt amid falling bonds
  • Country Garden can follow Sunac, Shimao’s path after failed CB
  • DaFa Properties Says $ 144.1 Million 2022 Notes Validly Offered
  • Sunac – Total cash at RMB160b, can ‘fully meet debt obligations’
  • Evergrande Unit Encourages Investors To Support Delay On Yuan Bonds

Chinese Builder Logan Denies Private Debt Due to Falling Bonds (1:23 PM HK)

Chinese construction firm Logan Group Co. does not have any privately placed debt, the company said, as some of its dollar bonds are on track to post record weekly declines amid market talk about the existence of private debt.

Such conversation is a “total rumor,” said a Logan spokesman. The company had nearly 40 billion yuan in cash at the end of 2021 and is preparing to sell a yuan bond in the medium term.

China Builders’ Dollar Bonds Expand Selling; KWG Leader Logan (12:36 pm Hong Kong)

Junk-rated dollar bonds from Chinese developers fell further, putting the high-yield market in line with its biggest declines in at least two months.

Prices fell for a ninth day in a row on Thursday, putting the week’s decline at 3.9 cents, a Bloomberg index of Chinese junk dollar bonds shows. Logan’s 5.75% note due 2025 fell 5.9 cents on the dollar to 75.3 cents as of 12:20 p.m. Friday in Hong Kong, according to data compiled by Bloomberg. KWG Group Holdings Ltd.’s 5.95% dollar bond due 2025 fell 4.5 cents to 44.5 cents and Times China Holdings Ltd.’s 6.75% note due 2025 fell 3, 6 cents to 37 cents.

Shanghai Stock Exchange to Review Poly Property’s M&A Bond Application (12:05 pm HK)

The Shanghai Stock Exchange will review Poly Property Group Co.’s request to sell bonds worth up to 5 billion yuan. The company plans to use the proceeds to pay off debt, increase liquidity, as well as for project construction and project mergers and acquisitions.

China’s State Developers Fall As Banks Cut Loans To LGFVs (11:29 AM HK)

Shares of Chinese state-owned property developers fell after several of the country’s largest banks were said to have become more selective in financing real estate projects through local government financing vehicles.

The Shanghai Stock Exchange Property Index fell as much as 3% on Friday, heading for a fourth day of losses, the longest streak of declines since Nov.30 and on track for its biggest four-day decline since September. .

The CSI 300 real estate index fell as much as 3.5%, the biggest drop since November 22.

Country Garden Shares Fall To Their Lowest Since 2017 (10:52 AM HK)

Country Garden shares fell as much as 3.9% in Hong Kong to their lowest level since March 2017. Its dollar bond due 2024 fell 1.3 cents on the dollar to 86.8 cents, marking a record low. as shown by prices compiled by Bloomberg.

“Country Garden may place shares after failing to issue $ 300 million in convertible bonds due to low demand,” said Daniel Fan, a credit analyst at Bloomberg Intelligence. The Sunac China stock placement could be a signal of investor demand for stocks rather than bonds, including convertibles. Country Garden, which has not issued shares since January 2018, has $ 425 million of 7.125% bonds due this month, Fan said.

The CSI 300 real estate index fell as much as 3.5%.

DaFa Properties Says 2022 Notes Validly Submitted (6:57 AM HK)

DaFa Properties Group Ltd. says that $ 144.1 million of its 9.95% dollar note due January 18, representing about 78% of the total principal amount outstanding, was validly offered for the exchange.

The company decided to waive the minimum acceptance quantity condition to its exchange offer, it said in a statement to the Hong Kong stock exchange. It will issue $ 138.4 million in new notes at 12.5% ​​annual interest maturing on June 30.

Sunac Says It Can ‘Fully Meet’ Debt Obligations (11:30 PM HK)

Sunac China said it had total cash of about 160 billion yuan at the end of 2021 and “can fully meet short-term debt obligations and project development needs,” according to a company statement.

Evergrande Unit Holders Endorse Yuan Bonus Delay (8:08 PM HK)

Bondholders of more than half of the 4.5 billion yuan principal of the note have agreed to a proposed payment extension, the developer’s Hengda Real Estate Group Co. unit said in a filing on the Shenzhen Stock Exchange. The firm had a January 8 deadline to meet investor demands for an early payment before seeking a delay last week, and voting on the extension offer was extended through Thursday.

© 2022 Bloomberg

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