UPDATE 1-Building default fears pummel Chinese property firms

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(Evergrande adds details on bondholder call, Fantasia restructuring plans, R&F downgrade by S&P)

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LONDON, Oct 8 (Businesshala) – Chinese property firms saw their bonds take another beating on Friday as the prospect of a wave of defaults in the sector in the wake of China Evergrande’s troubles is scaring investors.

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Amid a frenzy of developments, advisers to Evergrande Bondholders said they had not heard from the company even after the recent missed bond payments.

Smaller rival Fantasia hired advisors as it shocked markets this week by recalling a payment, while R&F Properties and Xinyuan both suffered credit rating downgrades, with the latter taking one of its own payments. Asked one to push back.

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A dollar-denominated bond issued by Greenland Holdings, which has built some of the tallest residential towers in the world, including Sydney, London, New York and Los Angeles, has dropped 10 cents to nearly halve its face value.

Cassa Group, which was the first Chinese property developer to default in 2015, saw one of its bonds fall 9 percent, while R&F and Central China real estate bonds were also widely sold.

Most of Evergrande’s and Fantasia’s outstanding bonds are already trading at around 20% of their face value.

Fantasia failed to repay this week The bond was previously changing hands near par because the firm had said only two weeks ago that its cashflows were fine.

It said on Friday that it was trying to find a solution “as quickly as possible”.

Fitch was the latest credit rating agency to downgrade debt-ridden Xinyuan Real Estate, as it announced plans to swap and extend bond payment deadlines next week.

The agency said it considered the move “a distressed debt exchange,” adding replacement bonds would give buyers less protection if the company defaults in the future.

Meanwhile, S&P downgraded R&F Properties’ rating to deep-in-junk ‘B-‘. Also China has super-sized projects under development in global cities such as London, Toronto and Melbourne.

“R&F’s ability to handle its near-term debt maturities will depend on the execution of large asset sales,” S&P said.

($1 = 0.1552 Chinese Yuan Renminbi)

Reporting by Mark Jones; Editing by Tom Arnold, Kirsten Donovan


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