(Bloomberg) — Kaisa Group Holdings Ltd. shares tumbled after the embattled developer resumed trading for the first time since it was deemed in default, while a key China Evergrande Group backer failed in its bid to go private, sending its stock lower.
Shimao Group Holdings Ltd. agreed to sell stakes in a Hong Kong development at a loss while Sunac China Holdings Ltd. unloaded assets in Shanghai as developers seek to raise cash. China will support “quality” real estate firms looking to acquire assets from struggling rivals, according to a report.
An index of Chinese developers fell for the sixth day in seven. Kaisa’s dollar bond due 2022 is indicated at 32.6 cents on the dollars, while Evergrande’s note due 2025 is at 18.7 cents on the dollar. Trading on Chinese dollar bonds remained light during the seasonal end-of-year lull, according to credit traders.
The rout in developer shares means the richest bosses behind China’s real estate firms have lost more than $46 billion combined this year, according to the Bloomberg Billionaires Index. Evergrande founder Hui Ka Yan’s wealth alone has plunged by $17.2 billion.
Key Developments:
- China Regulators Encourage Property Project Acquisitions: Report
- Evergrande Boss Leads $46 Billion Wealth Loss in Worst Year Yet
- China Regulators in Talks With Shimao, Trusts on Loan Extension
- Moody’s Downgrades Greenland Holding Group
- Sunac China Sells Three Projects for 2.68b Yuan: 21st Herald
- Shimao’s H.K. Disposal at a Loss May Imply Liquidity Woes: React
China Regulators Encourage Property Acquisitions: Report (11:15 a.m. HK)
China will focus on supporting “quality” property developers to acquire real estate projects of large companies faced with risks and difficulties, PBOC-backed Financial News reported, citing a notice from the central bank and the banking regulator.
The regulator encourages banks to provide property project loans in an appropriate, orderly manner, according to the report. China also supports quality developers selling debt instruments in the interbank market to fund project acquisitions. The PBOC and state-asset regulators held a meeting recently with some large private and state-owned real estate companies to encourage them to acquire quality projects from distressed developers. The acquisitions should be conducted in a market-oriented and law-based manner.
Jones Lang Sees Opportunities in China Despite Woes (11:05 a.m. HK)
China still has strong economic fundamentals that will provide opportunities for both onshore and offshore investors, Jones Lang LaSalle’s Asia-Pacific Chief Executive Officer Anthony Couse said in an interview on Bloomberg TV.
The Chinese government has been focused on ensuring developers deleverage in the past five years, and highly leveraged firms will look to dispose of assets, presenting opportunities for onshore capital, investment and fund managers.
Kaisa Appoints Advisers; Shares Resume Trading (8:10 a.m. HK)
Kaisa has appointed Houlihan Lokey (China) Ltd as its financial adviser and Sidley Austin as legal adviser after missing multiple offshore debt payments.
The financial adviser will evaluate Kaisa’s liquidity and explore all feasible solutions, the company said in a stock exchange filing on Monday. Kaisa said it hasn’t received any notice regarding acceleration of repayment by holders, and has been in talks with holder representatives about a comprehensive debt restructuring plan. The shares dropped 12% in Hong Kong trading.
Evergrande Backer’s Privatization Collapses (8:05 a.m. HK)
Chinese Estates Holdings Ltd. minority shareholders failed to give sufficient support to the company’s proposed privatization, derailing a plan by the long-time ally of Evergrande to delist next month. The stock plunged 30%.
Among the 74 stockholders participating, 64 voted no and made up 10.8% of the shares among the investors, according to a stock exchange filing Friday. The Hong Kong real estate firm, owned by the family of billionaire Joseph Lau, announced plans in October to buy out investors at HK$4 a share. The stock last traded at HK$3.78 before being halted Friday afternoon ahead of the results. Chinese Estates requested a trading resumption and said its listing will be maintained.
Evergrande Declared in Default by S&P for Failed Payments (8 a.m. HK)
Evergrande was labeled a defaulter by S&P Global Ratings, the second credit-risk assessor to do so.
S&P cut Evergrande to “selective default” over its failure to make coupon payments by the end of a grace period earlier this month, a move that may trigger cross defaults on the developer’s $19.2 billion of dollar debt. S&P also withdrew its ratings on the group at Evergrande’s request.
Fitch Ratings was the first to declare the property developer in default on Dec. 9. Long considered by many investors as too big to fail, Evergrande has become the largest casualty of President Xi Jinping’s campaign to tame the country’s overindebted conglomerates and overheated property market. Concern has since spread to higher-rated firms like Shimao Group as liquidity stress intensifies.
Shimao Sells Stake in Hong Kong Development (7:30 a.m. HK)
Shimao agreed to sell its 22.5% stake in three entities created for the Grand Victoria property development in Hong Kong for HK$2.1 billion ($270 million), according to an exchange filing.
The buyers include entities owned by fellow developers SEA Holdings, Wheelock & Co. and Sino Land. Shimao expects to recognize a loss of about HK$770 million from the sale.
Separately, Sunac China Holdings Ltd. sold three projects in Shanghai and Hangzhou for 2.68 billion yuan ($420 million), the 21st Century Business Herald reported, citing unidentified people.
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