(Bloomberg) — Shimao Group Holdings Ltd. jumped as much as 11% in Hong Kong trading after the shares fell to a decade low. Calm also returned Thursday to China’s junk dollar bond market.
Shimao’s note due 2022 rose 1.9 cents to 60.5 cents on the dollar after a three-day rout, while average prices for China’s high-yield bonds climbed as much as 2 cents in morning trade. Citigroup Inc. strategists turned overweight on that market, saying property notes offers attractive valuations as policy makers appear ready to come “to the rescue.”
In a sign of official concern about contagion risk from the recent selloff in Shimao’s bonds and shares, Shanghai authorities have reportedly held two closed-door meetings recently with developers under their oversight. The officials demanded the companies make contingency plans for risk prevention and asked them to disclose details of their borrowings.
They added that for reasonable financing demands from some developers, government agencies can help coordinate with financial institutions to extend loan maturities for key projects to ensure healthy development.
Key Developments:
- Shanghai Regulators Require Property Cos to Report Debts: CBH
- China’s Bubble Bursting Has Wall Street Eyeing a 2022 Rally
- China’s Property-Led Economic Slump Fuels Calls for Stimulus
- Why Hidden Debt Is a Big Problem for China Developers: QuickTake
- Hong Kong’s Property Tycoons Sacrifice Profit to Appease Beijing
- China Developers Sink as Shimao Deal Stokes Governance Concern
Guangzhou R&F’s Bond Exchange (12:49 p.m.)
Guangzhou R&F Properties Co.’s bond-exchange offer — announced Wednesday — will require support from three-quarters of the note’s holders making up at least 66% of the principal, according to investors who took part in a call with company officials on Thursday.
Dagong Gets Warning on Due Diligence (12:19 p.m. HK)
Dagong Global Credit Rating and its rating supervisor Qian Xiaoyu received warnings from China’s National Association of Financial Market Institutional Investors for violations of self-discipline rules in the interbank bond market, NAFMII said in a statement.
The Chinese rating firm has failed to fulfill its duties to carry out proper due diligence on a chemical product making unit of Shandong SNTON Group since 2011, according to the statement.
Greenland Wires Funds for $500 Million Bond (10:34 a.m. HK)
Greenland Holdings Corp. has wired funds to repay a $500 million bond which became puttable Thursday, the Chinese property developer said in a statement. It also pledged to repay about $200 million loans from overseas lenders on time.
Currency Risk in 2022 (6:06 a.m. HK)
Chinese developers with sizable offshore debt could face higher currency risk in 2022 if the yuan weakens against the dollar, according to Bloomberg Intelligence analyst Patrick Wong. The analyst’s stress test shows Guangzhou R&F’s total debt in cash may jump the most.
The borrowings of major developers could increase by an average of 1.1% in yuan terms if the U.S. dollar appreciates by 5%, according to the report.
Shanghai Tells Firms to Report Debt (00:24 a.m. HK)
Government agencies in Shanghai recently held two closed-door meetings with property developers under the city’s administration, according to a report from the 21st Century Business Herald, which did not say where it got the information.
Authorities demanded the companies make contingency plans for risk prevention and asked them to submit reports itemizing their debts — both on and off balance sheet — as well as borrowings onshore and offshore, the report said.
Silence From Wealth Management Partner (9:25 p.m. HK)
Developer China Fortune Land Development Co. has lost contact with its wealth-management partner China Create Capital Ltd., according to an exchange filing. The company has reported the matter to the local police. China Fortune land paid $313 million to Create Capital.
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