HONG KONG: As investors were abuzz yesterday with cash-strapped China Evergrande Group’s possible sale of a stake in a unit to raise as much as US$5bil (RM21bil), more Chinese property developers grappled with ratings downgrades on worries about their ability to repay debt.
Evergrande is facing one of the country’s largest-ever defaults as it wrestles with more than US$300bil (RM1.25 trillion) of debt. The company last month missed making coupon payments on two dollar bond tranches.The possible collapse of one of China’s biggest borrowers has triggered worries about contagion risks to the property sector in the world’s second-largest economy, as its debt-laden peers are hit with rating downgrades on looming defaults.
Chinese developer Sinic Holdings (Group) Co Ltd became the latest to be downgraded by Fitch Ratings on yesterday on uncertainty over the repayment of its US$246mil (RM1.03bil) bonds maturing Oct 18.
Sinic’s long-term issuer default rating was cut to C from CCC, and came after the company announced that certain subsidiaries have missed interest payments on onshore financing arrangements, Fitch said in its report.
Sinic could not immediately be reached by Reuters for comment.
The move comes amid persistent uncertainty over the fate of Evergrande, once China’s top-selling developer and now set to be one of the country’s biggest restructuring exercises.
The company on Monday requested a halt in the trading of its shares in Hong Kong pending an announcement about a major transaction. Evergrande Property Services Group, a spin-off listed last year, also requested a halt and said it referred to “a possible general offer for shares of the company.”
China’s state-backed Global Times said Hopson Development was the buyer of a 51% stake in the property business for more than HK$40bil (US$5.1bil or RM21bil), citing unspecified other media reports. Hopson also said it had suspended its shares, pending an announcement related to a major acquisition of a Hong Kong-listed firm and a possible mandatory offer.
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 Monday selloff, after it said it had failed to make a US$206mil (RM861mil) international market debt payment on time.
In a statement, the property developer said it would assess the potential impact of the non-payment on the group’s financial conditions.
An index of China high-yield debt, which is dominated by developer issuers, hit its lowest since the pandemic drawdown in 2020 on Monday, and has lost almost 20% since May – while comparable US and European indexes have rallied. — Reuters
Already a subscriber? Log in
Get 20% OFF The Star Digital Access
Cancel anytime. Ad-free. Unlimited access with perks.
