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High Yield Bonds Fall As Home Sales Slump: Evergrande Update

(Bloomberg) – Ailing Chinese real estate companies had another miserable month in November as the drop in home sales deepened.

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Builders across the country are facing $ 12 billion in trust payments due in December, posing a major challenge for an industry whose cash crunch has spooked global markets. Private sector promoters sell the fewest bonds in the domestic market in almost five years, increasing the risk of further defaults.

Chinese high-yield dollar bonds saw their decline accelerate Wednesday afternoon, falling as low as 3 cents on the dollar, according to credit traders. A gauge of real estate stocks gained 0.1%, while China Evergrande Group was down 1.8%.

Key developments:

  • China Private Builders Yuan Bond Sales Hit Five-Year Low

  • Chinese developers lead drop in high yield dollar bonds

  • China home sales drop deepens as easing shows little effect

  • R & F’s liquidity squeeze could persist amid slump in door-to-door sales: respond

  • Arkkan Raises $ 245 Million for China Real Estate Stimulus Fund

  • Chinese developers face $ 12 billion in trust payments this month

  • Kaisa Health Unit sells convertible notes due March 2022

Yuzhou promises shenzhen headquarters 1.1 billion yuan loan: REDD (3:16 p.m. HK)

Yuzhou Group Holdings Co. pledged a 1.1 billion yuan ($ 173 million) bank loan at its Shenzhen headquarters at the end of November, REDD reported on Wednesday, citing two sources with information on the matter. It is not known what the funding will be used for, they said according to REDD.

The loan, granted by a Chinese commercial joint-stock bank, has been fully utilized, REDD said, citing one of the sources.

China Private Builders Yuan Bond Sales Hit Five-Year Low (2:15 p.m. HK)

Chinese private sector promoters sell the fewest bonds in the domestic market in nearly five years, increasing the risk of further defaults for the industry.

Corporate yuan bond issues fell to 7.72 billion yuan in October and November, the smallest two-month total since January 2017, according to data compiled by Bloomberg. This contrasts sharply with state-owned manufacturers, which sold a record 89.1 billion yuan of local tickets last month.

China Home Sales Fall Intensifies (10:47 a.m. HK)

The drop in home sales deepened for real estate companies in November. According to preliminary data compiled by research firm China Real Estate Information Corp.

A growing debt crisis at companies like Evergrande and official efforts to curb real estate speculation have combined to crush housing demand and hit the world’s second-largest economy, forcing authorities to ease restrictions and allay buyer concerns. Of house.

Arkkan Raises $ 245 Million for China Real Estate Salvage Fund (9:48 a.m. HK)

Arkkan Capital, a credit-focused Asian special situations fund manager, completed the first close of a real estate turnaround fund in China. The company, founded by former Goldman Sachs banker Jason Brown, plans to further close Arkkan China Real Estate Fund in the first half of 2022.

China Baida Unit Sues Fantasia for Repayment of Over 100 Million Yuan Loan (8:33 a.m. HK)

Investment holding company Baida Group said one of its subsidiaries sued real estate developer Fantasia Holdings Group and its Hangzhou unit for repayment of a 100 million yuan loan. A Hangzhou court accepted the lawsuit.

China’s Default Rate Improves For Another Month, Says Bloomberg Intelligence (7:30 a.m. HK)

Chinese issuer default rates could remain stable in December, although more negative news about real estate issuers could spur market volatility and put more bonds in troubled territory, wrote Jason Lee, analyst at Bloomberg Intelligence, adding that the market could be reversed. in the midst of positive developments.

China’s default rates in December depend on Evergrande and Kaisa, according to Bloomberg Intelligence. They have a total of $ 171 million in interest payments that are still in 30 day grace periods that end in December. But recent and successful asset sales by developers to state-owned companies have triggered a positive reversal in the market value of Chinese high-yield bonds.

Chinese developers face $ 12 billion in trust payments this month (7:15 a.m. HK)

Chinese developers face $ 12 billion in fiat payments due in December, posing a major challenge for the industry whose liquidity shortage has spooked global markets.

Companies have already defaulted this year on more than $ 10 billion of these high-yield, short-term products, which had been seen as a legitimate, safe and predictable place to park money primarily for the wealthy Chinese and the institutions. This adds to at least $ 10.9 billion in potential losses in other wealth products from developers, including China Evergrande Group, which has angered employees and tens of thousands of people across the country. China.

Developers are struggling to stay afloat after Beijing pushes to curb the industry after years of meteoric growth. A deepening contagion in the $ 3 trillion trust sector will add pressure on policymakers to mitigate the crisis to avoid a more dramatic slowdown, with the real estate sector accounting for around 15% of the market. economy.

An overview of Evergrande’s maturity schedule:

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