Kaisa’s Dollar Bonds Rise on State Tie-Up: Evergrande Update

(Bloomberg) -- Kaisa Group Holdings Ltd. dollar bonds rallied after the defaulted developer unveiled a strategic tie-up with a state-controlled builder and one of China’s major bad-debt managers, as the government works to contain the sector’s cash crunch. 

Some notes were on pace for their biggest gains in months as Kaisa announced the pact with China Merchants Shekou Industrial Zone Holdings Co. and China Great Wall Asset Management Co. to develop real estate, tourism and other businesses in an area including Hong Kong and Macau. China’s state-controlled distressed-asset firms have been moving to support some developers at the urging of Beijing.

The Kaisa announcement and policy steps “could mean overall sentiment for the sector is turning,” said Wonnie Chu of Gaoteng Global Asset Management Ltd. 

Meanwhile Chinese high-yield dollar bonds rose at least 2 cents on the dollar, credit traders said, set for the longest uptrend in 16 months. A Bloomberg gauge of Chinese real estate firms rose 3.2% to a six-week high.

Key Developments:

• CIFI Offers to Purchase Outstanding 6.7% Yuan Notes Due 2022
• Kaisa Pact With State Firms No Cure-All for Sector: Gaoteng AM
• Jiayuan Intl 2023 Bond Set for Best Gain in 2 Months
• China Developers Rise to Six-Week High as Easing Lifts Sentiment
• China Cities Unwind Home-Buying Rules to Address Property Slump
• BlackRock Among Investors to Reduce Losing China Property Bets
• China Developers Rise to Six-Week High as Easing Lifts Sentiment
• China Junk Dollar Bonds Open Flat to 1 Cent Higher: Traders
• Yuzhou Offered to Sell H.K. Service Apartment for HK$620m: HKET
• Logan Default Swaps Won’t Be Settled at Auction, Panel Rules

Sunac to Resume Trading of 4.78% Yuan Bond on Thursday  (3:50 p.m. HK) 

Sunac Real Estate Group announced the resumption of trading of its 4 billion yuan bond in a Wednesday filing to the Shanghai Stock Exchange. The 4.78% local bond was halted from trading last week, ahead of the firm getting approval from bondholders on an 18-month repayment proposal.  

China Developers Rise to Six-Week High as Easing Lifts Sentiment  (3:30 p.m. HK)

A Bloomberg gauge of Chinese real estate firms gains as much as 4.1% to the highest since Feb. 22, extending a recent rally as more cities start easing property restrictions.

Investors need to be “careful and selective” on China property, said Tai Hui, chief Asia market strategist at JPMorgan Asset Management. “Companies seem super cheap -- that’s because they still have quite a bit of financial stress. I think the market could potentially be quite fickle in providing them with liquidity.”

China Junk Dollar Bonds Set for Longest Uptrend in 16 Months  (3:00 p.m. HK)

Chinese high-yield dollar bonds rose at least 2 cents on the dollar, credit traders said, led by gains among developers’ debt. 

Kaisa’s 9.75% note due 2023 climbed 6 cents to 25.8 cents as of 2:53pm in Hong Kong, Bloomberg-compiled prices show, set for its biggest gain since Oct. 18

Times China Holding Ltd.’s 6.6% dollar bond due 2023 jumped 8.2 cents to 64.7 cents. It has surged 33.7 cents the past eight sessions and is on pace for its highest close in three months.

China Cities Unwind Home-Buying Rules to Address Property Slump (11:58 a.m. HK) 

China’s local governments stepped up easing of home-buying rules in recent weeks after top policy makers vowed to support the struggling market. 

More than 60 municipal authorities loosened the regulations in the first quarter, according to a report from real-estate data firm China Index Holdings. They include four provincial capital cities that abandoned signature restrictions on how many residences households can own and how long they should hold properties before selling them. 

BlackRock Among Investors to Reduce Losing China Property Bets (11:05 a.m. HK) 

Institutional investors which publicly file their holdings trimmed exposure in March after adding $3.7 billion of dollar bonds in par value terms between early November and the end of February, according to data compiled by Bloomberg. 

The biggest investors in China’s junk property bonds reduced their exposure for the first time in months, a turning point after they previously doubled down through distress and default risks. The shift underscores how even long-term supporters of China’s beaten-down property bonds may be losing enthusiasm for bargain hunting. 

BlackRock Inc. cut $370 million last month to bring the value of its holdings, if calculated at par, to just under $5 billion. 

Kaisa’s USD Notes Jump on Pact With State-Backed Chinese Firms (9:51 a.m. HK)

Kaisa’s dollar notes rallied after the firm said it signed a cooperation pact with other firms.

Its 9.75% note due 2023 climbed 6.1 cents to 25.9 cents on the dollar, Bloomberg-compiled prices showed, set for the biggest gain since Oct. 18.

Yuzhou Offered to Sell H.K. Service Apartment for HK$620m: HKET (8:24 a.m. HK) 

Yuzhou Group Holdings Co. is in negotiations to sell a service apartment building in Hong Kong’s Mid-Levels for HK$620 million, Hong Kong Economic Times reports, citing people in the market.

The report didn’t name the potential buyer for the 85-unit project located at 48 Caine Road. The average price of the units is around HK$20,000 per square foot.

Evergrande Is Said to Agree to Pay Offshore Creditor Group Fees (8 a.m. HK) 

Evergrande agreed to pay the adviser fees of a bondholder group working with it to restructure debt, and to share more information with the creditors, according to people with knowledge of the agreement who asked not to be named discussing private deal talks.

The creditors, advised by Moelis & Co. and Kirkland & Ellis, began to prepare for negotiations in October after Evergrande delayed interest payments on one of its offshore bonds and reported that certain asset-sale plans had collapsed.

Logan Default Swaps Won’t Be Settled at Auction, Panel Rules (7:55 a.m. HK) 

The Credit Derivatives Determinations Committee ruled that no auction will be held to settle credit-default swaps on Logan, according to a statement Monday.

The panel previously ruled that swaps were triggered by a failure-to-pay credit event. The swaps covered a net $115.6 million of Logan’s debt as of March 11, according to the Depository Trust & Clearing Corp.

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