China developers' bonds extend slide on repayment concerns

Zhenro Services

15/02/2022 07:09

SHANGHAI, Feb 15 (Reuters) - Bonds of Chinese property
developers continued to fall on Tuesday, underscoring investor
worries in the beleaguered sector following weak sales data and
fresh rating downgrades.
    Leading losses onshore, a 5.45% September 2024
exchange-traded bond  CN175097=SS  issued by Zhenro Properties
Group  6158.HK  slumped more than 25%, triggering an automatic
trading suspension, a day after it fell about 10%. 
    Onshore bonds issued by units of developers Logan Group Co
 3380.HK , Guangzhou R&F Properties  2777.HK , Shimao Group
Holdings  0813.HK  and Ronshine China Holdings  3301.HK  fell
between 2% and 7%, dominating the Shanghai Stock Exchange's list
of the day's biggest losers. 
    Zhenro's dollar bonds dived even more, with a 7.1% September
2024 bond quoted by data provider Duration Finance at less than
15 cents on the dollar, yielding nearly 118%.
    Zhenro, China's 30th-biggest property developer by sales,
saw its shares slump more than 14% a day after Moody's cut its
rating and lowered its outlook, citing heightened refinancing
and default risks. Moody's also cut the rating for Logan Group,
placing it on review for a further downgrade.  urn:newsml:reuters.com:*:nB9N2QO00W
 urn:newsml:reuters.com:*:nFWN2UO01Y
    On Tuesday, Fitch Ratings cut Zhenro's rating and flagged a
negative outlook.  urn:newsml:reuters.com:*:nFWN2UP1LX 
    The downgrades come amid market speculation, labelled
"fictitious" by Zhenro, over its ability to service upcoming
debt maturities, and follow its announcement of aggregated
contracted sales of 7.897 billion yuan ($1.24 billion) in
January, down from 11.197 billion yuan a year earlier.
 urn:newsml:reuters.com:*:nFWN2UM121
    "Sales were down 40% to 50% year on year (for some
developers) ... based on this we expect policymakers will launch
more supportive measures," said Raymond Cheng, an analyst at
CGS-CIMB Research in Hong Kong. 
    "But in the near term those developers, if they have
liquidity problems then they still really have problems ... This
concern is spreading out to midsized developers."
    The Hang Seng mainland properties index  .HSMPI  fell 1.4%
against a 1.1% drop in the Hang Seng  .HSI . The CSI300 real
estate index  .CSI000952  fell 1.1% as the blue chip index
 .CSI300  notched a 0.8% gain.
      
    ($1 = 6.3538 yuan)

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