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

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 boost as a lot as $5 billion, extra Chinese language property builders grappled with scores downgrades on worries about their capacity 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 considered one of China’s largest debtors has triggered worries about contagion dangers to the property sector on this planet’s second-largest financial system, as its debt-laden friends are hit with ranking downgrades on looming defaults.

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

Sinic’s long-term issuer default ranking was lower 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 couple of main transaction. Evergrande Property Providers Group, a spin-off listed final yr, additionally requested a halt and mentioned it referred to “a attainable basic provide for shares of the corporate.”

China’s state-backed World 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 serious acquisition of a Hong Kong-listed agency and a attainable obligatory provide.

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 an enormous Monday selloff, after it mentioned it had didn’t make a $206 million worldwide market debt fee on time.

In a press release, the property developer mentioned it should assess the potential influence 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 nearly 20% since Could – whereas comparable U.S. and European indexes have rallied.