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Chinese junk bonds and real estate stocks fall again: Evergrande update

By on April 12, 2022 0

China’s high-yield dollar bonds fell for a second day as a three-week rally falters amid a worsening Covid outbreak and waning optimism over support measures Politics.

Bonds fell 0.5 cents to 2 cents on the dollar Tuesday morning, according to credit traders. Country Garden Holdings Ltd.’s 3.3% dollar note, due 2031, fell 1.3 cents to 62.7 cents at 9:29 a.m. in Hong Kong, after posting the biggest decline in more than three weeks, according to prices compiled by Bloomberg.

China Fortune Land Development made some repayment after creditors holding half of its outstanding land debt approved its restructuring proposal in the first quarter, the developer said in a statement Monday.

A Bloomberg gauge of developer stocks slid as much as 2.1%, on track to extend Monday’s 4.4% plunge on concerns about the impact of Covid lockdowns in Shanghai.

Key developments:

  • Chinese Li issues third growth warning as Covid takes its toll
  • Chinese junk bonds extend slide after gaining for three weeks
  • Zhenro defaults for the first time after missing bond payments
  • Chinese developers must change as market shrinks: paper

China Fortune Land Makes Partial Local Debt Repayment (12:51 p.m. HK)

China Fortune Land Development made some repayment after creditors holding half of its outstanding land debt approved its restructuring proposal in the first quarter, the developer said in a statement Monday.

Although the statement did not specify how much the holders were paid, at least five local holders of the company’s onshore bonds each received 1.3% of the principal repayment after approving the developer’s proposed debt overhaul. according to investors who requested anonymity while discussing private matters. issues.

Top Chinese Broker Sees More Coverage (12:03 a.m. HK)

A recent rebound in Chinese property bonds won’t last, and investors are embracing more hedging while diversifying through indices, according to an executive at one of China’s top brokerages.

“Because developers remain beset by a negative sales outlook and a protracted pandemic, the recent rebound in their bonds will be temporary,” said Yang Chen, executive director of the fixed income, currencies and commodities department of CITIC Securities Co. Investors looking for steady returns should instead pay attention to bonds issued by local government finance vehicles, perpetual bank debt and index-linked products, she added.

Chinese Developers Must Change as Market Shrinks: Paper (10:45 a.m. HK)

Chinese real estate developers must transform their growth model as their market potential diminishes, the supply of low-cost housing increases and regulations on their financial health tighten, the Securities Daily said in a commentary.

A consensus among the top 10 Chinese developers, as evidenced by what was said during their earnings briefings, is that the market size will shrink to 10 trillion yuan in the next 5-10 years, depending on the newspaper, which is supported by the official People’s Daily.

China Junk Bond Extension Slide (10:25 a.m. HK)

Chinese high-yield dollar bonds fell 0.5 to 2 cents on the dollar on Tuesday morning, credit traders said.

Country Garden’s 3.3% dollar bond, due 2031, fell 1.3 cents to 62.7 cents at 9:29 a.m. in Hong Kong, after posting the biggest decline in more than three weeks, according to prices compiled by Bloomberg. CIFI’s 4.45% rating due in 2026 and Sunac’s 6.65% rating due in 2024 also declined.

Shimao unit offers private yuan bond extension (10:22 HK)

A unit of Shimao Group Holdings offered a one-year extension for a redeemable national private bond this month, REDD reported, citing two sources briefed by bondholders.

Shanghai Shimao Co. has offered to pay 10% cash for its 500 million yuan, 3.7% bond due in 2023 and redeemable on April 26, while extending the remaining principal for one year, according to REDD.

CHINA CREDIT UPDATE: Spreads Tighten, Shanghai Foreclosure Weighs (9:07 a.m. HK)

Spreads for onshore 3-year AA-rated Chinese corporate bonds have tightened to the narrowest since November 2020.

A key offshore unit of Zhenro Properties Group Ltd. will ask investors to vote on a proposed 627 million yuan ($98.4 million) ABS tranche repayment extension proposal in a two-day virtual meeting starting Tuesday.

CIFI is offering an additional issue of HK$588 million at 6.95% conv. Bonds (6:22 HK)

The proposed additional sale of HK$588 million of convertible bonds due 2025 will be consolidated into a single series with its HK$1.96 billion 6.95% convertible debt, developer CIFI Holdings said in a statement. exchange file.

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