(Bloomberg) -- A further developer downgrade hit China’s embattled real estate sector, as S&P Global Ratings cut Greenland Holding Group Co., saying impaired funding access will limit its ability to weather the slump.
While S&P still expects the company to manage upcoming maturities, it lowered the long-term issuer rating to B+ from BB with a negative outlook and said cash could continue to deplete over the next 12 months due to weaker sales and cash collection.
Chinese property developers are responsible for about half of the world’s distressed dollar bonds, a fresh indication of the magnitude and global nature of the industry’s woes.
Read a QuickTake on how Evergrande’s trouble is spreading
Of the $139 billion of dollar-denominated bonds trading at distressed prices, 46% were issued by companies in China’s real estate sector, according to data compiled by Bloomberg on Oct. 12. That captured bonds trading at yield premiums of at least 10 percentage points above their benchmark rates.
Evergrande’s next test of investor confidence will be on Oct. 19, when 121.8 million yuan ($18.9 million) of interest is due on a domestic bond. It then has to deliver coupon payments for two dollar notes on Nov. 6.
Key Developments:
- CHINA REACT: Weak Credit Boosts Urgency to Support Growth
- China Dollar Bond Demand Slumps as Evergrande Stress Mounts
- China Developers Account for About Half of World’s Troubled Debt
- China’s Fantasia Forms Internal Debt Restructuring Team
- China Not ‘Dumb’ Enough for Lehman Moment, StanChart CEO Says
S&P Cuts Greenland Holding, Outlook Negative (8:15 a.m. HK)
A further developer downgrade hit the sector, as ratings agency S&P cut Greenland Holding to B+ from BB, saying impaired funding access will limit its ability to weather the downcycle in China’s real estate.
While S&P still expects the company to manage upcoming maturities, it has a negative outlook on Greenland and expects cash could continue to deplete over the next 12 months due to weaker sales and cash collection.
Weak Credit Boosts Urgency to Support Growth: BI (8:00 a.m. HK)
The undershoot in China’s September aggregate financing points to increased urgency for the authorities to step up fiscal and monetary support for the economy, Bloomberg economist Eric Zhu writes. Stabilizing growth is becoming a more pressing priority, especially given mounting headwinds ranging from an energy crunch to property market tightening. He expects policy support to increase in the months ahead, which should spur credit growth and start to steady the economy in the fourth quarter.
Moody’s Cuts Chinese Builder Sinic Further Into Junk (6:10 p.m. HK)
Moody’s Investors Service downgraded Sinic Holdings Group Co. to Ca from Caa2, following Monday’s announcement of a likely default. It comes three weeks after Moody’s put the Chinese developer on watch for a downgrade.
Sinic said it didn’t expect to pay the principal and last installment of interest due Oct. 18 on a $250 million dollar bond. Moody’s said its ratings outlook was negative.
China Developers Account for About Half of World’s Troubled Debt (4:11 p.m. HK)
In a world where central bank stimulus has wiped out most of the distress from global bond markets, the troubles of China’s property companies are standing out.
Of the $139 billion of U.S. dollar-denominated bonds trading at distressed prices, 46% were issued by companies in China’s real estate sector, according to data compiled by Bloomberg on Oct. 12, which captured bonds trading at yield premiums of at least 10 percentage points above their benchmark rates.
China’s Fantasia Forms Internal Debt Restructuring Team (4:09 p.m. HK)
Fantasia Holdings Group has formed an internal debt and assets restructuring team, to be led by executive director Ke Kasheng, according to a company WeChat post Wednesday. The team will “coordinate the group’s debt and asset restructuring, and resolve liquidity risks,” the post said.
Evergrande dollar bond interest deadlines:
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