Monday, November 29

Developer Moves to Raise Cash Hurt Shares: Evergrande Update


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(Bloomberg) — Chinese property developers are hurting their share prices as they move to raise cash to service their debt and ride out a historic funding squeeze.

Shares in Sunac China Holdings Ltd. fell as much as 10.9% after it raised about $953 million through the sale of new shares as well as from a stake in its property management unit. China Aoyuan Group Ltd. plunged as much as 7.9% after it said it would sell Hong Kong properties at a loss. Peers also dropped as declines in home prices quickened.

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Such moves showed how companies’ push to service their debt may come at a cost to shareholders, as bonds rose. Sunac’s dollar notes were indicated at about 6-9 cents higher, according to credit. Chinese junk dollar bonds traders are also rebounding further after their biggest gain in 20 months last week, following signals that authorities will offer support to ease the liquidity crunch.

Key Developments:

China Junk Bonds Add to Biggest Weekly Rally Since March 2020Stressed China Developers Sell Stock, Cut Dividends for CashChina Developer Sunac Raises $953 Million; Chairman Issues LoanChina Developer Sunac Is Said to Explore Sale of Tourism AssetsMore Chinese Property Firms Plan Bond Sales on Interbank MarketChina Market Spillovers to World Limited, Ex-PBOC Adviser SaysChina Analysts Warn of Risks in Indebted Developers: NewsChinese Developer Yango Awaits Verdict on Debt-Extension Offer

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China Home Market Woes Deepen as Prices, Sales Fall Further (12:17 pm HK)

The housing slump deepened in October, adding pressure on authorities to stabilize the market. New-home prices in 70 cities slid 0.25% last month from September, when they fell for the first time in six years, statistics bureau data showed Monday.

The figures may add to speculation that regulators will consider easing their clampdown on leverage in the real-estate industry as the property downturn risks derailing China’s economic recovery.

China Economy Stabilizes as Spending, Power Supply Picks Up (11:37 am HK)

China’s economy performed better than expected in October as retail sales climbed and energy shortages eased, partly offsetting a slump in property.

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Industrial output rose 3.5% in October from a year earlier, while retail sales growth accelerated to 4.9%, beating economists’ forecasts. Growth in fixed-asset investment eased to 6.1% in the first 10 months of the year, compared with a forecast of 6.2%. The surveyed jobless rate was steady at 4.9%.

The better-than-expected numbers will come as a relief after the economy’s momentum weakened in the second half of the year, with both demand and supply coming under pressure. Beijing’s crackdown on the property market has slowed lending to a sector that accounts for as much as 25% of gross domestic product, while energy shortages have caused factories to curb production.

China Developers Drop as Housing Price Declines Accelerate (10:11 am HK)

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Shares of Chinese property developers fell after official data showed that home prices in the country declined at a faster rate last month. The CSI 300 Real Estate Index slid as much as 3% and recorded the biggest two-day loss in two weeks.

Sunac’s Dollar Bonds Jump 6-9 Cents After Sale of New Shares (9:40 am HK)

Sunac dollar notes were indicated at about 6-9 cents on the dollar higher across the curve Monday morning, credit traders said as the share sale helped boost bond prices. Its 5.95% dollar note due 2024 is indicated up 7.7 cents on the dollar at 83.1 cents, according to Bloomberg-compiled prices as of 9:35am in Hong Kong.

Stressed Chinese Developers Issue Shares, Cut Dividends for Cash (8:51 am HK)

Sunac China issued shares at a more than 10% discount and borrowed $450 million from its billionaire founder. Kaisa scrapped its interim dividend and China Aoyuan sold investments in Hong Kong apartments and parking spaces at a loss.

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The hunt for cash by Chinese property developers accelerated over the weekend. While there are nascent signs of a thaw in the onshore credit market for some real estate companies, the dollar bond market remains shut for most lower-rated borrowers.

Yango Extends Exchange Offer Deadline to Nov. 17 (8 am HK)

Yango Group has extended the expiration deadline for its dollar bond exchange offer and consent solicitations to 4 pm London time on Nov. 17, according to a Hong Kong stock exchange filing. The settlement of new notes, delivery of exchange and consent consideration to eligible holders is scheduled on or about Nov. 23 under the new timetable.

China Aoyuan to Sell Hong Kong Property Assets for HK$900m (7:43 am HK)

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Aoyuan Property (Hong Kong), a unit of China Aoyuan, agrees to sell three property investment holding companies and the loan they owe to the unit for cash to private investor Norman Ng Tang Fai, according to filing to Hong Kong stock exchange Sunday evening.

Assets of the holding companies comprise of flats and car parking spaces at Yin Yee Mansion on Robinson Road, Hong Kong Island. Aoyuan expected to recognize estimated loss of about HK$176.6 million ($22.7 million) from the sale. The company will use net proceeds for repayment of HK$600 million loan facility and general working capital.

Kaisa Group Will Not Pay Interim Dividend (7:35 am HK)

The board of Kaisa Group Holdings Ltd. has resolved that the interim dividend will not be paid, it said in a filing late on Friday. Trading will remain halted until further notice.

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Cash-strapped Kaisa is trying to sell property assets with an estimated value of $12.8 billion. Its slow progress on disposals has increased the likelihood it defaults on dollar-bond interest payments at some point, Fitch Ratings said in its latest downgrade last week, citing risks including undisclosed debt from wealth management products and declining sales.

S&P Global Ratings said Thursday in its ratings cut that “a default scenario is inevitable within six months.”

China Developer Sunac Raises $953 Million; Chairman Issues Loan (7:22 am HK)

Sunac raised about $953 million through the sale of new shares as well as a stake in its property management unit, the latest Chinese developer to seek funds amid an industry-wide liquidity crunch. It sold 335 million shares at a price of HK$15.18 each, raising about $653 million, in a statement Sunday, confirming an earlier story by Bloomberg News.

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Another $300 million came from a sale of 158 million shares in its property management arm Sunac Services Holdings Ltd., via a subsidiary. Sunac Services shares were sold at HK$14.75, a discount of 11% to Friday’s closing price.

China CBIRC to Maintain Stable Property Prices, Expectations (7:15 am HK)

China will continue to curb the “financialization of real estate” and prevent the sector from turning into a bubble, the banking and insurance regulator says in a statement late Friday. It will maintain stable prices of land and housing, improve the long-term mechanism for real-estate regulation, and continue to step up efforts to handle non-performing assets and regulate shadow banking, the statement said.

PBOC Says to Maintain Steady, Sound Property Market Development (7:10 am HK)

The Chinese central bank will resolutely curb monopoly and the disorderly expansion of capital in the financial services sector, adding it will maintain steady and sound development of the property market, it said in a statement late Friday.

A look at Evergrande’s maturity schedule:

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