Hopson tumbles as auditor quits; Oaktree loan: Evergrande update

The stock sank as much as 31% in Hong Kong, and its dollar bonds were poised for record declines.
Image: Bloomberg

Hopson Development Holdings Ltd.’s shares tumbled the most since 2009 after the builder — seen as one of the safer names among China’s property companies — said PricewaterhouseCoopers has resigned as its auditor.

The stock sank as much as 31% in Hong Kong, and its dollar bonds were poised for record declines. A Bloomberg Intelligence index of real-estate stocks fell a further 2%, setting the stage for its biggest weekly drop since early November. China’s high-yield dollar bonds slipped at least three cents on the dollar Friday morning as concerns about Hopson’s financial health weighed on developers’ notes and traders moved to pare risk exposure.

PwC’s resignation could kickstart the mass resignation of auditors at other Chinese builders, said Bloomberg Intelligence analyst Andrew Chan.

Meanwhile, the Financial Times reported that U.S. investment firm Oaktree Capital Group LLC has a secured loan to ‘Venice,’ a tourism resort on the Yellow Sea Coast developed by China Evergrande Group in mainland China. That came as authorities are considering a proposal to break up the embattled builder by selling the bulk of its assets, people familiar with the matter told Bloomberg.

Key Developments:

  • Hopson Development’s Bonds, Shares Plummet After Auditor Resigns
  • China Is Said to Weigh Breaking Up Evergrande to Contain Crisis
  • PwC Could Kick-Start Mass Quitting of China Property Auditors
  • Oaktree Secures Loan to China Tourism Resort Over Evergrande: FT
  • China’s Corporate Bond Default Rate Set to Rise in 2022: Fitch
  • Housing Crackdown Weighs Down China’s Economy as the Year Starts
  • China High-Yield Dollar Bonds Fall 3-5 Cents Ahead of Holiday

Hang Lung Looks to Buy Distressed Properties in Mainland China (11:23 a.m. HK)

Hong Kong developer Hang Lung Properties Ltd. is looking to buy high-quality real estate from distressed peers in mainland China.

The company is interested in commercial-property assets in Tier 1 and 2 cities, Vice Chair Adriel Chan said in an interview with Bloomberg Television.

Hopson Dollar Bonds Set for Record Drop after Auditor Resigns (9:15 a.m. HK)

Hopson’s notes sunk to what would have been record closing lows in early trading before rebounding a bit by midday. Its 7% bond due 2024 was down 12.6 cents on the dollar at 79.4 cents, according to Bloomberg-compiled prices, and its 6.8% note due 2023 dropped 10.6 cents to 81.6 cents.

Oaktree Has Secured Loan to Evergrande China Resort: FT (8:05 a.m. HK)

Oaktree Capital has a secured loan to ‘Venice,’ a tourism resort on the Yellow Sea Coast developed by Evergrande in mainland China, the Financial Times reports, citing a letter to investors and an unidentified person close to the matter. Oaktree Capital’s loan allows it to take control of the land in case there’s a default of Evergrande, according to the report.

The asset management firm has also moved to seize a plot in Hong Kong after Evergrande defaulted on a loan against which Oaktree had security, the FT previously reported, citing people familiar with the matter.

Country Garden Repaid Notes Due Jan. 27 (7:41 a.m. HK)

Country Garden Holdings Co. has repaid the outstanding senior notes in full with accrued interest, the Chinese developer said in an exchange filing. The notes will be canceled and delisted from Singapore Exchange Securities Trading.

China’s Corporate Bond Default Rate to Rise: Fitch (7:32 a.m. HK)

China’s corporate-bond default rate is set to increase this year due to nonpayments at privately owned developers, predicts Fitch Ratings.

It also forecasts that defaults on capital-market debt from the state sector, including LGFVs, are likely to remain at a similar or slightly higher level than last year.

State-Owned Cos. Bid for Kaisa Projects: Yicai (6:22 a.m. NY)

Some state-owned enterprises bid for Kaisa Group Holdings Ltd.’s property projects in Shenzhen, China Business News reports, citing unidentified people.

The deal may be completed after the Chinese New Year holiday, according to the report, which didn’t give a timetable or name any buyers.

S&P Signals Logan’s Rating May Be Cut (6:22 p.m. HK)

S&P Global Ratings indicated it may be ready to lower Logan Group Co.’s credit rating, citing “previously unreported debt guarantees” as it put its grades on watch for downgrade.

“If the previously unreported debt is confirmed, Logan’s credit profile and liquidity may be hit,” S&P said, adding more information is required to analyze the extent of such debt.

© 2022 Bloomberg

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