Global Private Banks Stop Accepting Fantasia Bonds as Collateral
(Bloomberg) -- The private-banking units of Citigroup Inc. and Credit Suisse Group AG have stopped accepting the bonds of Fantasia Holdings Group Co. as collateral amid rising concerns about the Chinese developer’s financial health, according to people familiar with the matter.
The banks have assigned a zero lending value to the notes, meaning their private-wealth clients can no longer use them as security for loans, the people said, asking not to be identified because the matter is confidential.
Representatives for Citigroup and Credit Suisse declined to comment. Fantasia said it’s working on bond buybacks, declining to comment further.
The development underscores investor concerns about Fantasia as the company joins a slew of smaller Chinese developers under stress. Fantasia’s longer-tenor notes have plummeted, and were the worst performers in August in a Bloomberg index of Chinese high-yield dollar bonds.
Read more about latest concerns about Fantasia’s debt
Concerns over property giant China Evergrande Group have turned investors sour on riskier junk bonds. Fantasia is rated the equivalent of B at all three of the major international risk assessors. Fitch Ratings and Moody’s Investors Service changed their outlook on the developer to negative from stable in July.
A Fantasia 6.95% dollar bond maturing in December rose 1.4 cents on the dollar to 79.9 cents, according to data compiled by Bloomberg. Fantasia recently bought back about $12 million of its bonds on the open market, Hong Kong exchange filings showed this month.
The company has $752 million in dollar bonds coming due through the end of the year including $208 million in October, Bloomberg-compiled data show.
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