Chinese Developer R&F Cut to Default at Fitch: Evergrande Update

(Bloomberg) -- Chinese property developer Guangzhou R&F Properties Co. was downgraded to restricted default by Fitch Ratings following its successful delay in repaying most of a $725 million dollar bond due Thursday.

The debt move, completed Thursday, was necessary for the builder to avoid default given its limited liquidity, the credit assessor said.

Meanwhile, shares of Country Garden Holdings Co. fell for a third day and closed at its lowest since March 2017, after China’s largest developer reportedly failed to get enough interest for a $300 million convertible bond. Some of its dollar notes were on pace for their worst-ever weeks, part of a wider rout for debt issued by Chinese developers.

Key Developments:

• China’s Property Market Is Set for State-Dominated ‘Age of Rust’
• Chinese Builder Logan Denies It Has Private Debt as Bonds Slump
• Country Garden May Follow Sunac, Shimao’s Path After Failed CB
• DaFa Properties Says $144.1m of 2022 Notes Validly Tendered
• Logan Group’s Dollar Bonds on Track for Largest-Ever Daily Drops
• Sunac: Total Cash at RMB160b, Can ‘Fully Meet Debt Obligations’
• Evergrande Unit Gets Investors to Back Yuan Bond Payment Delay
• Country Garden Worries Hit Higher-Rated China Developers’ Bonds

Chinese Developer R&F Downgraded to Restricted Default by Fitch (5:25 p.m. HK)

Precipitating the downgrade was Guangzhou R&F buying back just 16% of a $725 million dollar bond originally due Thursday and extending the rest by six months, underscoring the company’s liquidity shortage. 

The builder initially said it planned to set aside about $300 million for the bond repurchase before saying it had “materially less” money than expected to repurchase notes. 

Trickle of Chinese Developers Plan Local Bond Sales for M&A (2:03 p.m. HK) 

At least two Chinese property developers are planning to sell yuan-denominated bonds to help pay for acquisitions, following signs in recent weeks that authorities would favor such debt issuance amid a broader real estate market slump.

Poly Property Group Co. intends to issue as much as 5 billion yuan of securities and use a part of the proceeds for property project M&As, according to the Shanghai stock exchange’s website. The bourse will review the note sale application, it said. China Merchants Shekou Industrial Zone Holdings Co. aims to issue yuan notes for M&A, according to a notice on the website of the National Association of Financial Market Institutional Investors. It has gotten approval for the plan, it said.

Chinese Builder Logan Denies It Has Private Debt as Bonds Slump (1:23 p.m. HK)

Logan Group Co. doesn’t have any privately placed debt, the company said, as some of its dollar bonds are on pace for record weekly declines amid market chatter about the existence of private debt.

Such talk is “total rumor,” a Logan spokesperson said. The company had nearly 40 billion yuan of cash at the end of 2021 and is preparing to sell a medium-term yuan bond.

China Builders’ Dollar Bonds Extend Selling; Logan, KWG Lead (12:36 p.m. HK)

Chinese developers’ junk-rated dollar bonds fell further, putting the high-yield market on pace for its biggest declines in at least two months. Prices fell for a ninth-straight day on Thursday, putting the week’s drop at 3.9 cents, a Bloomberg index of Chinese junk dollar bonds shows. 

State-Owned China Developers Fall as Banks Curb Loans to LGFVs (11:29 a.m. HK)

Shares of state-owned Chinese real estate developers dropped after several of the country’s largest banks were said to have become more selective about funding real estate projects by local government financing vehicles.

The Shanghai Stock Exchange Property Index fell as much as 3% on Friday, headed for a fourth day of losses, the longest streak of declines since Nov. 30. and on track for its steepest four-day drop since September. The CSI 300 Real Estate Index slid as much as 3.5%, the most since Nov. 22.

DaFa Properties Says 2022 Notes Validly Tendered (6:57 a.m. HK)

DaFa Properties Group Ltd. says $144.1 million of its 9.95% dollar note due Jan. 18, representing around 78% of total outstanding aggregate principal amount, were validly tendered for exchange.

The company decided to waive the minimum acceptance amount condition to its exchange offer, it said in a statement to the Hong Kong stock exchange. It will issue $138.4 million of new notes at 12.5% interest per annum maturing on June 30.

©2022 Bloomberg L.P.