China property sector woes deepen as markets await Evergrande deal By Reuters

© Reuters. FILE PHOTO: Law enforcement officials and safety personnel stroll outdoors the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China, September 30, 2021. REUTERS/Aly Track

By Clare Jim

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

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

The attainable collapse of certainly one of China’s largest debtors has triggered worries about contagion dangers to the property sector on the earth’s second-largest economic system, as its debt-laden friends are hit with score downgrades on looming defaults.

Chinese language developer Sinic Holdings (Group) Co Ltd grew to become the most recent to be downgraded by Fitch Scores on Tuesday on uncertainty over the compensation of its $246 million bonds maturing Oct 18.

Sinic’s long-term issuer default score was minimize 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 largest restructuring workouts.

The corporate on Monday requested a halt within the buying and selling of its shares in Hong Kong pending an announcement a few main transaction. Evergrande Property Companies Group, a spin-off listed final yr, additionally requested a halt and mentioned it referred to “a attainable basic supply for shares of the corporate.”

China’s state-backed International Occasions mentioned Hopson Improvement was the customer 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 significant acquisition of a Hong Kong-listed agency and a attainable obligatory supply.

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

Individually, Chinese language homebuilder Fantasia Holdings’ dollar-denominated bonds misplaced almost 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 should assess the potential impression of the non-payment on the group’s monetary situations.

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

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