China biggest property developer sees bonds slump (updated)

Central China Real Estate

17/01/2022 13:04

(Adds detail, charts)
    By Andrew Galbraith and Marc Jones
    SHANGHAI/LONDON, Jan 17 (Reuters) - China's biggest
homebuilder by sales, Country Garden, saw its bonds slump on
Monday as the country's property crisis showed no sign of
letting up. 
    Last week was the worst on record for Country Garden's bonds
and fresh falls of up to 17 points on Monday left most of its
international market debt at 25-35 percent below its face value.
 XS175011846=1M   XS188044271=1M   XS221096002=1M 
    Analysts cited reports that it had dropped plans to raise
$300 million last week after debt market investors had shown
insufficient appetite.  urn:newsml:reuters.com:*:nIfp1HpM98 
    A spokesperson at Country Garden responded to the reports
saying the company had no plan to sell a convertible bond at
present.
    "It just seems to be the fear factor playing out," said
Seaport Global analyst Himanshu Porwal. "People are just marking
things down as much as they can".
    Country Garden's share price had also tumbled 8% in Hong
Kong, though it wasn't the only one to see sharp falls.
    Central China Real Estate  0832.HK , Yuzhou Group Holdings
 1628.HK , KWG Group Holdings  1813.HK  and Jingrui Holdings
 1862.HK  all fell sharply on, slumping as much as 20.3%.
    Chinese developers are facing an unprecedented liquidity
squeeze due to years of regulatory curbs on borrowing, leading
to a string of offshore debt defaults, credit-rating downgrades
and sell-offs in developers' shares and bonds.
    The World Bank's economic prospects report last week warned
a severe and prolonged downturn in China's real estate sector
would have significant economy-wide reverberations, as
developers' total liabilities amount to almost 30% of the
country's GDP.
    "What it has turned into is a cash crunch in the sector,"
Colm D'Rosario, a high-yield debt manager at Europe's biggest
asset manager Amundi, said.
    The primary concern is that many of China's big developers
still have large debt payments to make this year, at time when
traditional borrowing markets remained largely closed to them. 
    "At some point the government will take steps as they don't
want a downward spiral, but they are walking a tightrope,"
D'Rosario said.            

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Country Garden bonds slump as crisis bites    https://tmsnrt.rs/34M33XB
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 (Reporting by Marc Jones; editing by Louise Heavens)
 ((marc.jones@thomsonreuters.com; +44 (0)20 7513 4042; Reuters
Messaging: marc.jones.thomsonreuters.com@reuters.net  Twitter
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