Country Garden drop weighs on property sector: Evergrande update

The stock is on track for its worst week since September, while a dollar bond due in 2024 is also set for a record low.
Image: Bloomberg

Shares of Country Garden Holdings Co. fell for a third day after China’s largest developer failed to get enough interest for a $300 million convertible bond, weighing on other higher-rated property firms amid contagion concerns.

The stock is on track for its worst week since September, while a dollar bond due in 2024 is also set for a record low.

China Evergrande Group shares gained after it avoided what would have been its first default on a public onshore bond. The stock rose as much as 2.5% following three days of declines. An Evergrande unit said it got investor backing to delay early repayment of a 4.5 billion yuan ($707 million) note.

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

Key Developments:

  • China’s Property Market Is Set for State-Dominated ‘Age of Rust’
  • Chinese Builder Logan Denies It Has Private Debt as Bonds Slump
  • Country Garden May Follow Sunac, Shimao’s Path After Failed CB
  • DaFa Properties Says $144.1m of 2022 Notes Validly Tendered
  • Sunac: Total Cash at RMB160b, Can ‘Fully Meet Debt Obligations’
  • Evergrande Unit Gets Investors to Back Yuan Bond Payment Delay

Chinese Builder Logan Denies It Has Private Debt as Bonds Slump (1:23 p.m. HK)

Chinese builder Logan Group Co. doesn’t have any privately placed debt, the company said, as some of its dollar bonds are on pace for record weekly declines amid market chatter about the existence of private debt.

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

China Builders’ Dollar Bonds Extend Selling; Logan, KWG Lead (12:36 p.m. HK)

Chinese developers’ junk-rated dollar bonds fell further, putting the high-yield market on pace for its biggest declines in at least two months.

Prices fell for a ninth-straight day on Thursday, putting the week’s drop 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 dropped 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 Exchange to Review Poly Property’s M&A Bond Application (12:05 p.m. HK)

The Shanghai stock exchange will review Poly Property Group Co.’s application to sell as much as 5 billion yuan worth of bonds. The company plans to use the proceeds to repay debt, boost liquidity, as well as of for project construction and project M&A.

State-Owned China Developers Fall as Banks Curb Loans to LGFVs (11:29 a.m. HK)

Shares of state-owned Chinese real estate developers dropped after several of the country’s largest banks were said to have become more selective about funding real estate projects by local government financing vehicles.

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

The CSI 300 Real Estate Index slid as much as 3.5%, the most since November 22.

Country Garden Shares Decline to Lowest Since 2017 (10:52 a.m. HK)

Country Garden shares dropped as much as 3.9% in Hong Kong to the lowest since March 2017. Its dollar bond due 2024 fell 1.3 cents on the dollar to 86.8 cents, set for a record low, Bloomberg-compiled prices show.

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

The CSI 300 Real Estate Index dropped as much as 3.5%.

DaFa Properties Says 2022 Notes Validly Tendered (6:57 a.m. HK)

DaFa Properties Group Ltd. says $144.1 million of its 9.95% dollar note due January 18, representing around 78% of total outstanding aggregate principal amount, were validly tendered for exchange.

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

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

Sunac China said it had total cash of around 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 Back Yuan Bond Payment Delay (8:08 p.m. HK)

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

© 2022 Bloomberg

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