Sunac Coupon Said to Go Unpaid, Bonds Decline: Evergrande Update

(Bloomberg) — Chinese high-yield dollar bonds declined for a second day, as a three-week rally loses steam amid a worsening Covid outbreak and fading optimism over policy support measures.

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Bondholders of Sunac’s 7.95% dollar bond maturing 2023 hadn’t received a coupon payment by early afternoon Tuesday, according to people familiar with the matter who asked not to be identified because they’re not authorized to speak about it.

Times China Holdings Ltd.’s 6.75% bond due 2023 dropped 4.9 cents to 57 cents as of 1:51pm in Hong Kong, according to Bloomberg-compiled prices, on pace for largest decline since Feb. 17.

Property developers need to transform their growth model as their market potential declines, supply of low-cost housing increases and regulation on their financial health tightens, the Securities Daily said in a commentary.

Key Developments:

  • China Developers’ High-Yield Dollar Bonds Decline 2-4 Cents

  • China’s Li Issues Third Warning on Growth as Covid Takes Toll

  • Zhenro Defaults for First Time After Missing Bond Payments

  • China Developers Need to Change as Market Seen Shrinking: Paper

Sunac Creditors Said to Not Get Dollar Bond Coupon (3 p.m. HK)

Bondholders of Sunac’s 7.95% dollar bond maturing 2023 hadn’t received a coupon payment by early afternoon Tuesday, according to people familiar with the matter who asked not to be identified because they’re not authorized to speak about it.

The amount initially due Monday was $29.5 million, according to Bloomberg-compiled data. Sunac has a 30-day grace period to make payment before triggering an event of default, according to the bond’s offering circular.

China Developers’ High-Yield Dollar Bonds Fall (1:51 p.m. HK)

Chinese high-yield dollar bonds fell further Tuesday, with drops of 2-4 cents on the dollar in the property sector according to credit traders, as a recent rebound continues to fade.

Times China’s 6.75% bond due 2023 dropped 4.9 cents to 57 cents as of 1:51pm in Hong Kong, according to Bloomberg-compiled prices, on pace for largest decline since Feb. 17.

Sunac Dollar Bonds Underperform (12:50 p.m. HK)

Sunac dollar bonds were among those from Chinese developers posting the biggest declines Tuesday, with some poised to fall for a fourth day. The firm’s 5.95% note due 2024 dropped 4 cents on the dollar to 25.7 cents as of 12:47pm in Hong Kong, according to Bloomberg-compiled prices, on track for largest decrease in four weeks.

Top China Broker Sees More Hedging (12:03 p.m. HK)

A recent rebound in Chinese property bonds won’t last, and investors are adopting more hedging while diversifying through indexes, according to an executive at one of China’s top brokerages.

“Because developers remain beset by a negative sales outlook and prolonged pandemic, the recent rebound in their bonds will be temporary,” said Yang Chen, executive director at the fixed income, currency and commodities department of CITIC Securities Co. Investors seeking steady returns should instead pay attention to bonds issued by local government financing vehicles, banks’ perpetual debt and index-linked products, she added.

China Developers Need to Change as Market Seen Shrinking: Paper (10:45 a.m. HK)

China’s property developers need to transform their growth model as their market potential declines, supply of low-cost housing increases and regulation on their financial health tightens, the Securities Daily said in a commentary.

A consensus among China’s top 10 developers, as reflected by what’s been said at their earnings briefings, is market size will shrink to 10 trillion yuan in the next 5-10 years, according to the newspaper, which is backed by the official People’s Daily.

China Junk Bonds Extend Slide (10:25 a.m. HK)

Chinese high-yield dollar bonds dropped 0.5 to 2 cents on the dollar Tuesday morning, according to credit traders.

Country Garden’s 3.3% dollar bond due 2031 dropped 1.3 cents to 62.7 cents as of 9:29 a.m. in Hong Kong, after posting the biggest decline in more than three weeks, according to Bloomberg-compiled prices. CIFI’s 4.45% note due 2026 and Sunac’s 6.65% note due 2024 also declined.

Shimao Unit Proposes Private Yuan Bond Extension (10:22 a.m. HK)

A Shimao Group Holdings unit has proposed a one-year extension for a domestic private bond puttable this month, REDD reported, citing two sources briefed by bondholders.

Shanghai Shimao Co. has proposed to pay 10% upfront cash for its 500 million yuan, 3.7% bond due 2023 and puttable on April 26, while extending the remaining principal by one year, according to REDD.

CHINA CREDIT UPDATE: Spreads Tighten, Shanghai Lockdown Weighs (9:07 a.m. HK)

Chinese 3-year AA-rated onshore corporate bond spreads tightened to the narrowest since Nov. 2020.

A key offshore unit of Zhenro Properties Group Ltd. will ask investors to vote on a proposal to extend repayment of a 627 million yuan ($98.4 million) ABS tranche at a two-day virtual meeting starting Tuesday.

CIFI Proposes Additional Issue of HK$588m 6.95% Conv. Bonds (6:22 a.m. HK)

The proposed additional sale of HK$588 million of convertible bonds due 2025 will be consolidated and form a single series with its HK$1.96 billion 6.95% convertible debt, developer CIFI Holdings said in an exchange filing.

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