Shimao Jumps By Record on Report of Asset Sale Discussions
(Bloomberg) -- Embattled Chinese developer Shimao Group Holdings Ltd.’s shares jumped the most on record after REDD reported that it’s in talks with a bigger rival on asset disposals.
The company’s stock closed 19% higher in Hong Kong on Monday, while subsidiary Shanghai Shimao Co. surged by the 10% daily limit in Shanghai. Shimao’s dollar bonds also climbed.
The moves followed REDD’s report that China Vanke Co. is in talks to acquire assets from Shimao, citing an unidentified source close to the latter. Investor relations officials at both companies said they have no update when reached by Bloomberg.
Shimao, a bellwether for financial contagion in China’s property industry, is the latest developer to come under pressure to pay its debt. Long considered one of the healthier builders, Shimao Group had until recently appeared largely unscathed even as junk-rated rivals including China Evergrande Group and Kaisa Group Holdings Ltd. defaulted.
S&P Global Ratings downgraded Shimao Group Holdings’ long-term rating to B- from B+ as it sees liquidity deteriorating “further,” according to a statement after market close on Monday. Shimao will need to “expedite sales and asset disposals” to properly manage its debt maturities, S&P said.
Separately, the builder has commissioned agents in Hong Kong to speed up the disposal of its assets amid a missed loan payment, Caixin reported on Sunday. The company is seeking buyers such as funds and international investors mainly for its commercial properties including those owned by its Hong Kong-listed real estate unit, according to Caixin.
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