(Bloomberg) — China Evergrande Group plans to sell its entire stake in HengTen Networks Group Ltd. at a hefty loss. That’s the first time since the developer’s liquidity crisis began that it has agreed to dispose of a Hong Kong-listed business.
Evergrande’s shares fell in Hong Kong Thursday, while HengTen rallied as much as 28%. China’s dollar junk bonds rose, according to traders. Country Garden Services Holdings Co., which suspended stock trading before the open, plans to raise $1.03 billion via the sale of 150 million new shares. Developer Agile Group Holdings Ltd. agreed to issue five-year exchangeable bonds.
The fundraising efforts and recent loosening of policy measures from Beijing has some traders asking if the worst is over for China’s real estate sector. Goldman Sachs Asset Management, Oaktree Capital Group and one of Asia’s oldest hedge funds have begun fishing for opportunity. Predictions of a U.S.- or Japan-style property crash in China “will be proved wrong,” wrote Barclays Plc analysts.
Key Developments:
- China’s Housing Market to Contract But Not Crash, Barclays Says
- China’s Embattled Developers Rush to Raise $2 Billion in One Day
- Country Garden Services to Raise $1 Billion in Share Placement
- Evergrande to Sell Entire Stake in HengTen for $273 Million
- Chinese Developer Yango Scrambles to Avoid Missing Bond Payment
- China Property Easing Has Traders Asking If the Worst Is Over
- Agile to Raise $310.7m From Exchangeable Bond Sale
- China to Ease Curbs on Developers in $152 Billion ABS Market
- One of Asia’s Oldest Hedge Funds Buys Distressed China Debt
The Bubble Won’t Burst, Says Barclays (2:30 p.m. HK)
While Beijing is serious about reining in soaring property prices, its aim isn’t to kill the market, wrote Barclays analysts including Jian Chang in a note dated Thursday. Authorities have sufficient tools to manage a contraction and prevent a disorderly crash, according to the analysts.
“Our base case housing-market outlook remains a controllable contraction in property investment (and home prices) in 2022, rather than a crash or a financial meltdown,” the analysts wrote.
About $2.4 Billion in 24 Hours (1:10 p.m. HK)
The scramble for cash by Chinese property companies is intensifying as the industry looks for ways to alleviate a historic liquidity squeeze. Firms announced plans to raise $2.4 billion in just the past 24 hours, taking the total over the last week to at least $4.2 billion, according to Bloomberg calculations.
Kaisa to Sell Land, HK01 Says (10:49 a.m. HK)
Kaisa Group Holdings Ltd., whose shares remain suspended in Hong Kong, will sell a residential land lot in the city to billionaire Francis Choi Chee-ming, HK01 reported. Kaisa was the first Chinese developer to default on dollar bonds back in 2015. Three of its units resumed trading on Tuesday after saying liquidity issues faced by the parent company wouldn’t have a material impact on their operations.
China Junk Bonds Rise (10:30 a.m. HK)
China’s speculative-grade dollar bonds rose as much as 2 cents Thursday, according to traders. Panic has eased in the market in the past week, with yields dropping to about 20% from nearly 25%.
In the stock market, Evergrande slipped more than 2%, as did shares of unit China Evergrande New Energy Vehicle Group Ltd. Country Garden Holdings Co., China’s biggest builder, fell 3.4%. A-Living Smart City Services Co. plunged as much as 13%, touching the lowest level since October 2019.
Country Garden Services Halted (8:48 a.m. HK)
Country Garden Services halted trading in Hong Kong pending a release related to the placing of new shares, according to Hong Kong stock exchange filing. The company plans to sell the stock at HK$53.35 apiece, according to terms obtained by Bloomberg.
The company in May raised $2 billion issuing new shares and convertible bonds, which at the time was the largest additional fundraising in the sector.
Yuan Bonds Sold (8:42 a.m. HK)
Poly Developments and Holdings Group Co. sold 2 billion yuan of 5-year bonds at 3.55%, according to a statement on Chinamoney.com.cn, the website of the National Interbank Funding Center.
HengTen Stake Sale (8 a.m. HK)
Evergrande will sell its 18% stake in HengTen to Allied Resources Investment Holdings Ltd. at HK$1.28 apiece, according to a Hong Kong exchange filing. Evergrande will raise about $273 million from the sale, and said it expects to incur a loss of HK$8.5 billion ($1.1 billion). Evergrande in September agreed to sell a stake in a regional Chinese lender for about $1.6 billion.
The buyer, Hong Kong-based Allied Resources, is controlled by Li Shao Yu.
Agile Sells $310 Million in Exchangeable Bonds (7:46 a.m. HK)
Property developer Agile Group Holdings Ltd. agreed to sell HK$2.42 billion of five-year exchangeable bonds, according to terms of the deal filed to the Hong Kong stock exchange.
The bonds are exchangeable into ordinary shares of property management unit A-Living Smart City at an initial exchange price of HK$27.48 apiece. The price represents a 20% premium to A-Living’s last close in Hong Kong.
A look at Evergrande’s maturity schedule:
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