SHANGHAI, Sept. 16 (Reuters) – China Evergrande Group’s main unit (3333.HK), Hengda Real Estate Group Co. Ltd., on Thursday called for the suspension of trading in its land corporate bonds after a downgrade, as the country’s No. 2 real estate developer struggles with a liquidity crisis.
The application comes after repeated commercial freezes of bonds in recent days by the Shanghai and Shenzhen stock exchanges due to volatile trading.
Hengda received notice on September 15 from China rating agency Chengxin International (CCXI) that the ratings of the bonds had been downgraded to A from AA, and that both the ratings of the bonds and the rating of the ‘issuer were included in a watch list for further degradation. he said in a stock market presentation.
Hengda applied to suspend trading in its land corporate bonds for a day, he said. When trading resumes on September 17, its bonds traded in Shanghai and Shenzhen will only be traded through negotiated transactions.
One bond trader, who declined to identify himself, said changes to the trading mechanism were likely aimed at limiting participation and curbing volatility.
“Many companies would adjust the trading mechanism of their bonds before delinquency,” he said.
The company’s debt, generated in 2023, traded with Shenzhen, was last quoted at 24.99 yuan on Wednesday and Shanghai debt in May 2023 was quoted at 30 yuan.
China’s Evergrande $ 8.75% June 8.25% bond was trading at 29,375 cents on Thursday morning, up about 4 cents from Wednesday’s lows, according to financial data provider Duration Finance.
The indebted real estate developer is striving to raise funds to pay its many lenders and suppliers as it moves between a messy mess with powerful impacts, a managed collapse or the less likely prospect of a bailout by of Beijing. Read more
Concerns about the possible contagion of the Evergrande debt crisis have spread to other high-yielding Chinese issuers. A high-yielding Chinese debt index (.MERACYC) fell to 374,646 on Thursday morning, its lowest level since April 14, 2020.
Reports by Samuel Shen and Andrew Galbraith; Editing by Jacqueline Wong and Stephen Coates
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