Selloff Spreads to Others With Coupon Unpaid: Evergrande Update
Investor concerns over China Evergrande Group’s debt are shifting to the country’s stronger property companies.
(Bloomberg) -- Investor concerns over China Evergrande Group’s debt are shifting to the country’s stronger property companies as a selloff across the industry’s dollar bonds hits higher-quality borrowers.
The fear of contagion comes as holders of dollar notes sold by Evergrande unit Scenery Journey Ltd. are yet to receive payment for coupons that were officially due Saturday. The unit had two dollar bond coupons due Nov. 6: $41.9 million on a 13% note and $40.6 million on a 13.75% bond.
China investment-grade dollar notes weakened further on Monday and some Chinese real-estate developers’ debt fell as investors eyed possible contagion from the property industry. Market participants were also on high alert to the risk of more policy change as the Communist Party kicks off a major convention this week.
An Evergrande unit’s 13% dollar note due 2022 that had a coupon due Saturday was indicated at 22.5 after rising 4.7 cents over the previous two weeks.
Evergrande has probably been making interest payments despite a looming restructuring so it can complete some transactions without oversight by creditors, distressed debt investor SC Lowy’s Chief Executive Officer Michel Lowy said in a Bloomberg TV interview.
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- Yango Group Extends Bond Exchange Offer Deadline to Nov. 12
Evergrande Sells HengTen Networks Shares (5:15 p.m. HK)
China Evergrande Group sold 200 million HengTen Networks shares Nov. 8 at an average of HK$2.0365 each, according to a disclosure filing.
The sale, which reduced Evergrande’s stake to 20.82% from 22.98%, raised about HK$407.3 million ($52.3 million), according to Bloomberg calculations.
Government-Held Developer Latest to Plunge (2:40 p.m. HK)
In a sign that not even state-owned firms are safe from the deepening rout in Chinese developer bonds, Sino Ocean Group Holding Ltd., part-owned by the finance ministry, has become the latest property company to see its bonds slump. Its 4.75% note due 2030 fell to as low as 73.48 cents on the dollar, with spreads over comparable Treasuries widening to a record 800 basis points, according to data compiled by Bloomberg.
That’s despite the firm being rated investment-grade at two global credit assessors and holding about 54 times more cash and equivalents than China Evergrande Group. Sino Ocean’s shares have been doing better, rebounding 35% from their September low. They rose 3.5% Monday.
Evergrande Unit Holders Yet to Get Payments (2:34 p.m. HK)
Two holders of dollar notes sold by Evergrande unit Scenery Journey Ltd. are yet to receive payment for coupons that were officially due Saturday.
The unit had two dollar bond coupons due Nov. 6: $41.9 million on a 13% note and $40.6 million on a 13.75% bond. Coupons which come due on holidays or over weekends may be paid by issuers at the end of the next business day. Both of the coupons in question have a 30-day grace period before any missed interest payment would be considered a default, according to a bond prospectus.
China Bond Rout Shifts to Other Developers (12:10 p.m. HK)
Investor concerns are shifting to China’s stronger property firms as a selloff across the industry’s dollar bonds turns to higher-quality borrowers.
A dollar bond from China’s largest property firm by sales, Country Garden Holdings Co., fell 2 cents to 77.4 cents Monday morning after tumbling a record 10.3 last week. China Vanke Co., the nation’s second largest, also slid. A dollar note sold by one of its units was indicated down at 96.2 cents after falling 3.2 cents last week, the steepest drop since March 2020.
Yango Group Extends Exchange Offer Deadline (11:35 a.m. HK)
Yango Group is extending the expiration deadline for its dollar bond exchange offer by two days to Nov. 12 by giving investors more time to support the deal, it said in a statement to the Hong Kong stock exchange. The developer says it might not be able to make principal and interest payments due Nov. 12 on 2023 bonds putted to the company.
Evergrande Gains Are ‘Mind Boggling’ (10:51 a.m. HK)
SC Lowy Chief Executive Officer Michel Lowy said during a Bloomberg TV interview that there’s “no doubt in my mind that a restructuring is going to be needed at some point in the very near future.” Recent Evergrande bond gains in the light of coupon payments reflect “a level of optimism that is sort of mind boggling.”
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