(Bloomberg) -- China’s debt-saddled property developers have seen their offshore bonds lose $82 billion in value, and more losses and defaults are likely, analysts at Bloomberg Intelligence said.
Investor concerns about concealed debt at Logan Group Co. on Monday fueled a heavy selloff in Chinese dollar bonds, both investment-grade and and high-yield. A key interest rate cut by China wasn’t enough to stem a drop in property stocks, with traders calling for more policy support as the economy slows.
- China Aoyuan 2023 Bond Set for Best Gain in 2 Months
- Logan Group Buys Back 1m Shares for HK$5.5m Jan. 17
- Country Garden Buys Back $10m of 2022 and 2026 Notes
- Times China Downgraded to B+ by S&P, Outlook Negative
Bond Losses Pass $82 Billion; May Rise More If China Doesn’t Act (6:06 a.m. HK)
The market capitalization of China property’s offshore bonds has dropped from $151 billion of par value to $69 billion of market value, indicating more than $80 billion in investor losses, Bloomberg Intelligence credit analyst Andrew Chan wrote in a note. This excludes losses from onshore bonds.
If China refrains from aggressively easing property policy, more losses and defaults could be coming, he said. Should a developer with a national footprint run into trouble, home buyers worried that projects may not be completed could end up avoiding purchases from all private property firms.
China’s Property Developers Face Contagion Risks, BI Says (6:03 a.m. HK)
China’s debt-saddled private property developers face growing risks of a liquidity crunch, with home buyers and bondholders’ shattered confidence raising the specter of broader financial contagion, Bloomberg Intelligence real estate analysts Patrick Wong and Kristy Hung wrote in a note.
Some companies may take a cue from Guangzhou R&F Properties Co. by extending debt terms or taking a haircut on portions. Companies may also follow Sunac China Holdings Ltd. and Shimao Group Holdings Ltd. with equity placements at ultra-low valuations and deep discounts, they said.
Top state-owned developers such as China Overseas Land & Investment Ltd. and China Resources Land Ltd., with balance sheets exceeding $1 trillion, could be well-positioned for M&A as they buy from distressed, private-sector competitors at fire-sale prices.
Logan Group Buys Back 1m Shares Jan. 17 (5:36 a.m. HK)
Logan Group Co. bought back shares for HK$5.5 million ($706,000), paying HK$5.47-HK$5.86 per share, it said in a statement to the Hong Kong stock exchange Monday evening. The company bought 3 million of its shares for HK$17 million on Jan. 14.
Country Garden Buys Back $10m of 2022 and 2026 Notes (5:28 a.m. HK)
Country Garden Holdings Co. bought back an aggregate principal amount of $5 million of its 4.75% notes due July 2022 and $5 million of its 7.25% notes due April 2026, according to a statement to the Hong Kong stock exchange late Monday.
The repurchased notes will be canceled and the company will monitor markets for further bond buying.
Times China Downgraded to B+ by S&P, Outlook Negative (6:59 p.m. HK)
In the latest ratings downgrade to hit China’s property sector, Times China Holdings Ltd.’s long-term rating was cut by S&P Global Ratings to B+ from BB-, putting it further into junk territory, with its outlook changed to negative from stable.
Sales of Country Garden Home Projects Halted in Qingdao (6:06 p.m. HK)
According to a statement from the local housing regulator published Thursday and reported Monday, the government of West Coast New Area in the east Chinese city of Qingdao halted sales of two home projects of Country Garden and a project of China Aoyuan Group Ltd. because of violations in sales. The authority told the two developers to rectify problems before allowing them to resume sales.
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