China property sector woes deepen as markets await Evergrande deal

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HONG KONG, Oct 5 (Businesshala) – As investors braced for a cash crunch on Tuesday, a potential sale of a stake in a unit of China Evergrande Group to raise to $5 billion, more Chinese property developers raised concerns about themselves. Were battling with a drop in ratings. ability to repay the loan.

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Evergrande is facing one of the biggest defaults the country has ever faced as it grapples with more than $300 billion in debt. The company defaulted on making coupon payments on two dollar bond installments last month.

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The potential collapse of one of China’s biggest lenders has raised concerns about contagion risks for the property sector in the world’s second-largest economy, as its debt-laden peers defaulted with a downgraded rating. Is.

Chinese developer Cynic Holdings (Group) Co Ltd on Tuesday became the latest to be downgraded by Fitch Ratings due to uncertainty over the repayment of its $246 million bond maturing on October 18.

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Fitch said in its report that Cynic’s long-term issuer default rating was downgraded from ‘CCC’ to ‘C’, and the company announced that some subsidiaries would not make interest payments on onshore financing arrangements.

Cynic could not immediately be reached by Businesshala for comment.

The move comes amid continued uncertainty over the fate of Evergrande, once China’s best-selling developer and now one of the country’s largest restructuring exercises.

The company on Monday requested a stay pending announcement about a major transaction in its shares trading in Hong Kong. Evergrande Property Services Group, a spin-off listed last year, also requested a halt, saying it was “a potential general offering for the company’s shares”.

China’s state-backed Global Times, citing unspecified other media reports, said that Hopson Development was the buyer of a 51% stake in the property business worth more than HK$40 billion ($5.1 billion). Hopson also said it has suspended its shares, pending an announcement related to a major takeover and potentially mandatory offer of a Hong Kong-listed firm.

A spokesperson for Evergrande did not immediately respond to a request for comment.

Separately, Chinese homebuilder Fantasia Holdings’ dollar-denominated bonds lost nearly half their market value in a massive sale on Monday after it said it had failed to make timely $206 million international market debt payments. .

In a statement, the property developer said it would assess the potential impact of non-payment on the group’s financial conditions.

An index of China’s high-yield debt, which is dominated by developer issuers, on Monday hit its lowest since the fall of the pandemic in 2020, and has lost nearly 20% since May – while comparable US and European indices has accelerated. (Reporting by Claire Jim; Editing by Sumeet Chatterjee Editing by Sri Navaratnam)


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