China property firms' shares, bonds take hit after Yango debt exchange

Ronshine China Holdings

02/11/2021 06:37

SHANGHAI, Nov 2 (Reuters) - Shares and bonds of Chinese
property developers stumbled on Tuesday as worries over
spreading financial contagion worsened following a debt exchange
from one of the country's top 20 homebuilders that triggered a
flurry of credit warnings.
    Yango Group Co Ltd  000671.SZ  on Monday offered to exchange
some U.S. dollar bonds for new notes personally guaranteed by
its chairman to avoid defaulting on upcoming debt payments.
 urn:newsml:reuters.com:*:nL1N2RS0A4
    Fitch Ratings said on Tuesday that it considered the offer a
distressed debt exchange, downgrading Yango's rating to "C" from
"B-". Moody's Investors Service earlier cut Yango's corporate
family rating to Caa2 from B2, citing liquidity risk.
    "Yango may not be able to mobilise all of its cash holdings
to repay its maturing debts, given that most of it resides in
its project companies. In addition, Yango's exposure to its
joint ventures is significant, which could limit its ability to
control its cash flow," Moody's said in a statement.
    China Chengxin International, a domestic agency, said it had
placed the company on a watchlist for possible downgrades, while
Dagong Global Credit Rating Co on Monday cut its outlook on
Yango to negative due to uncertainty over funds for debt
repayments.
    Yango Group did not immediately respond to Reuters' requests
for comment.
    The downgrades and warnings weighed on market sentiment on
Tuesday, pushing Hong Kong's mainland properties sub-index
 .HSMPI  down more than 4%, taking its losses since an Oct. 22
peak - when China Evergrande Group  3333.HK  narrowly avoided a
$19 billion default - to nearly 17%. 
    The CSI300 real estate index of A-shares  .CSI000952  fell
more than 3%, while Yango's own shares fell as much as 9%.
    Yango Group's bonds fell sharply for a second day, with
Duration Finance quoting its 12% March 2024 bond down almost 58%
on the day to less than 13 cents, yielding nearly 160%. Its
Shenzhen-traded April 2024 bond  CN149103=SZ  fell more than
15%.
    November 2022 and 2023 bonds issued by Evergrande unit
Scenery Journey fell more than 12% to about 20% of their face
value ahead of coupon payments totaling $82.5 million this
weekend.  urn:newsml:reuters.com:*:nL1N2RP044
    Bonds issued by developers Yuzhou Group Holdings Co
 1628.HK , Ronshine China Holdings  3301.HK  and Zhenro
Properties Group  6158.HK  also fell more than 10%.
    Evergrande narrowly avoided a catastrophic default for the
second time in a week on Friday, making a last-minute payment on
an overdue dollar bond coupon. On Tuesday its shares  3333.HK 
gave up early gains to fall 2.5%.  urn:newsml:reuters.com:*:nL1N2RO3H1
    Evergrande's woes have brought collateral damage to China's
property sector, with some Chinese developers forced into formal
default on their dollar bonds last month and others proposing
extended payment schedules.
    

 (Reporting by Andrew Galbraith; Editing by Stephen Coates)
 ((Andrew.Galbraith@tr.com; +86 21 2083 0079; Reuters Messaging:
andrew.galbraith.thomsonreuters.com@reuters.net ; Twitter: https://twitter.com/apgalbraith))