(Bloomberg) — A barrage of commentary from China’s top institutions shows authorities are stepping up efforts to manage the international message on China Evergrande Group’s collapse — even if the developer itself is staying silent about its default status.
Evergrande and Kaisa Group Holdings Ltd. were downgraded on Thursday to restricted default by Fitch Ratings, which cited missed dollar bond interest payments in Evergrande’s case and failure to repay a $400 million dollar bond in Kaisa’s. The latter will probably reject a rescue package worth up to $2 billion from a group of bondholders advised by Lazard Ltd., Debtwire reported Thursday.
Evergrande shares fell as much as 3.9% in Hong Kong, while its property services company slipped 2.2%. A gauge of real estate stocks retreated 1.3%, extending losses this year to 30%. Bonds issued by Evergrande and other China high-yield issuers were little changed Friday in Hong Kong as activity slows toward the year-end, according to credit traders. Kaisa shares have been suspended since Wednesday.
Key Developments:
- China Tries to Manage Global Message on Evergrande Collapse
- Evergrande-Related Stocks Drop as Developer Declared in Default
- Evergrande’s Biggest Broker in Clearing System Cuts Position
- Moutai Surge Shows Bull Market Returning: What to Watch in China
- Colour Life Services Applies to Resume Trading on Friday
- What to Watch in China Credit Markets After Decade’s Worst Rout
China to Prioritize M&A in Property Bond Sales: Report (1:35 p.m. HK)
China’s National Association of Financial Market Institutional Investors told developers in a meeting Friday that it will prioritize bond sale registrations for M&A purposes or for funds to be used in projects that are under construction, the Securities Times reported, citing a person it didn’t identify.
China Tries to Manage Global Message on Evergrande Collapse (1:27 p.m. HK)
A barrage of commentary from China’s top institutions shows authorities are stepping up efforts to manage the international message on China Evergrande Group’s collapse — even if the developer itself is staying silent about its default status.
English-language statements from agencies including the China Banking and Insurance Regulatory Commission, along with a recorded broadcast from People’s Bank of China Governor Yi Gang on Thursday, suggest Beijing is seeking to target global investors with a clear message: there won’t be a bailout of Evergrande, but the risks are ring-fenced.
Evergrande’s Biggest Broker in Clearing System Cuts Position (11:08 a.m. HK)
Haitong International Securities Co., a Chinese broker that holds the most Evergrande shares in Hong Kong’s clearing system, has reduced its position in the debt-laden developer this week.
The broker’s position in Evergrande was lowered by 225 million shares, according to the CCASS system. As of Thursday’s close, it reported a position of about 1.88 billion Evergrande shares in the clearing system, or a 14.24% stake in the company, versus 2.11 billion shares last Friday.
Kaisa Unlikely to Take Deal Offered by Group: Debtwire (10:05 a.m. HK)
Kaisa will probably reject a rescue package worth up to $2 billion from a group of bondholders advised by Lazard Ltd. as it would only provide a solution for short-term debt, Debtwire reported Thursday, citing unidentified people.
The proposed package deals only with Kaisa’s $400 million note due Dec. 7 and perhaps some other bonds due early next year, two of the people told Debtwire. Some large bondholders have decided not to join the group, and at least two real money funds have recently tapped out, the people said.
Moutai Surge Shows Bull Market Returning (8:30 a.m. HK)
The world’s second-largest stock market is showing signs of exuberance for the first time since Chinese policy makers popped a bubble earlier this year.
The FTSE China A50 Index of China’s biggest stocks has climbed more than 6% in a six-day advance, its steepest since February. Its relative-strength index is at a 10-month high, a sign of increasing momentum.
The gains are coinciding with two large defaults in the credit market in Evergrande and Kaisa — and it’s no coincidence. The Communist Party has shifted to easing mode to limit the fallout from a property slowdown, deploying measures to help boost liquidity in the financial system.
A look at Evergrande’s maturity schedule:
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