Kaisa’s Debt Swap Looms; Ashmore Buys Bonds: Evergrande Update

(Bloomberg) -- The newfound stability in Chinese dollar bonds will be tested this week as Kaisa Group announces whether creditors agreed to swap $400 million of dollar notes in a move designed to avert default. Investors holding more than half of those notes are not willing to support the deal, local media outlet Jiemian reported.

London-listed asset manager Ashmore Group bought almost $100 million of bonds issued by China Evergrande Group or its subsidiaries, bringing its holdings of the debt to more than $500 million at the end of September as other investors were heading for the exit. Evergrande closed 0.4% higher after plunging 8.8% on Monday. 

Key Developments:

• Kaisa Is Next Worry for China Bond Traders After Rocky Month
• Aoyuan Doesn’t Repay $150m Guaranteed Accelerated Loan: Debtwire
• Yango’s Parent Gets Rejected on Bond Payment Extension Proposal
• China Growth Hinges on Property, Policy - 2022 Outlook
• Ashmore Doubled Down on Evergrande as Others Fled for the Exits
• CalSTRS Backs Sino-Ocean Group on 2 of 5 Proposals Dec. 10
• Times China’s Dollar Bonds, Onshore Notes Both Fall Sharply

Yango’s Parent Gets Rejected on Bond Payment Extension Proposal (4:38 p.m. HK)

Fujian Yango Group, the parent company of Yango Group, didn’t receive bondholders’ approval to extend principal payment for its 400 million yuan bond due Dec. 7, according to a statement on Chinamoney.com.cn.

Aoyuan Doesn’t Repay $150m Guaranteed Accelerated Loan: Debtwire (4:34 p.m. HK)

China Aoyuan has failed to repay a $150 million guaranteed accelerated loan that backs private notes issued via Rainmaker Solutions, Debtwire reported, citing a notice dated Nov. 24.

Notice describes the missed payment by the developer as a “collateral defaultm,” it said.

Goldman Sees Positive 2022 Returns in China Property High-Yield (10:48 a.m. HK)

Goldman Sachs forecasts China’s high-yield property sector potentially outperforming segments of Asia’s credit market next year, but warns investors need to be cautious with credit stress “unlikely to meaningfully subside.” 

“Our preference is to stay neutral across IG and HY, and focus on relative value,” analysts including Kenneth Ho wrote in a note dated Friday.

China Dollar Junk Bonds Set For First Gain in More Than a Week (10:12 a.m. HK)

Chinese high-yield dollar bonds rose 1 cent on the dollar Tuesday morning, according to credit traders, putting the notes on track for the first gain in more than a week, a Bloomberg index shows. Meanwhile Asian investment-grade dollar bond spreads tightened at least 2 basis points, set for the biggest improvement in about a week.

Kaisa Is Next Worry for China Bond Traders After Rocky Month (5 a.m. HK)

The newfound stability in Chinese dollar bonds will be tested this week as one of the market’s largest issuers announces whether creditors agreed to a debt swap designed to avert default.

Kaisa Group Holdings Ltd.’s offer to exchange its $400 million of dollar notes maturing Dec. 7 for new ones due 18 months later expires at 4 p.m. in London on Thursday. If the offer -- which requires a 95% approval rate -- fails to win support, the struggling firm has said it may not be able to repay bonds and could consider a debt restructuring. 

Investors holding more than half of the notes are not willing to support the exchange offer, local media outlet Jiemian reported, citing a letter from a financial adviser that represents some of the bondholders.

Ashmore Doubled Down on Evergrande as Others Fled for the Exits (10:13 p.m. HK)

China Evergrande buckling under its massive debt load and investors heading for the door looked like a buying opportunity for asset manager Ashmore Group. 

From July to September, London-listed Ashmore bought almost another $100 million of bonds issued by Evergrande or its subsidiaries. The trades brought its holdings of the debt to more than $500 million at the end of September, according to data compiled by Bloomberg. The total level held by Ashmore may be even higher since 75% of its assets are held in segregated mandates, for which data may not be available. 

Ronshine China Says Funds Remitted for Bond (6:07 p.m. HK)

Ronshine China said it has remitted $140 million into the designated bond-repayment account of Citicorp International for the payment of outstanding senior notes due Friday, according to a Hong Kong stock exchange filing.

The dollar bond has an outstanding amount of $136.6 million, plus $3.58 million in interest.

A look at Evergrande’s maturity schedule:

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