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Nov 30, 2021
, Bloomberg News
(Bloomberg) -- Chinese developers are facing $12 billion in trust payments coming due in December, posing a major challenge for an industry whose liquidity squeeze has spooked global markets.
Even though more negative news about real-estate issuers may spur market volatility and put bonds in distressed territory, China’s issuer-based bond default rates may stay stable in December, Bloomberg Intelligence analyst Jason Lee wrote. He said the market may reverse from its selloff amid positive developments. China’s December default rates hinge on China Evergrande Group and Kaisa Group Holdings Ltd., according to Bloomberg Intelligence.
Evergrande closed 0.4% higher on Tuesday after plunging 8.8% the previous day.
Key Developments:
China Baida Unit Sues Fantasia Over 100m Yuan Loan Repayment (8:33 a.m. HK)
Investment holding company Baida Group said one of its subsidiaries sued property developer Fantasia Holdings Group and its Hangzhou unit over the repayment of a 100 million yuan ($16 million) loan. A court in Hangzhou has accepted the lawsuit.
China Default Rate Improves for Another Month, Bloomberg Intelligence Says (7:30 a.m. HK)
China’s issuer-based bond default rates may stay stable in December even though more negative news about real-estate issuers may spur market volatility and put more bonds in distressed territory, Bloomberg Intelligence analyst Jason Lee wrote, adding that the market may reverse from its selloff amid positive developments.
China’s December default rates hinge on Evergrande and Kaisa, according to Bloomberg Intelligence. They have a combined $171 million of interest payments that are still in 30-day grace periods which end in December. But developers’ recent, successful asset sales to state-owned enterprises sparked a positive reversal in the mark-to-market value of China high-yield bonds.
China’s Developers Face $12 Billion in Trust Payments This Month (7:15 a.m. HK)
Chinese developers are facing $12 billion in trust payments coming due in December, posing a major challenge for the sector whose liquidity squeeze has spooked global markets.
The firms have already this year defaulted on more than $10 billion of these high-yielding, short-term products, which had been deemed to be a legitimate, safe and predictable place to park money for mainly wealthy Chinese and institutions. That comes on top of at least $10.9 billion of potential losses in other wealth products at developers, including China Evergrande Group, which has angered employees and tens of thousand people across China.
Developers are struggling to stay afloat after Beijing pushed to rein in the industry following years of breakneck growth. A deepening contagion into the $3 trillion trust industry will add pressure on policy makers to ease the crunch in order to avert a more dramatic slowdown, with the real estate industry accounting for about 15% of the economy.
A look at Evergrande’s maturity schedule:
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