(Bloomberg) — China Evergrande Group’s Chairman Hui Ka Yan cut his stake in the company for the first time since it went public in 2009, the latest sign he’s liquidating personal assets to help stave off a default by the world’s most indebted developer.
The company’s soccer stadium has been taken over by a government body with a view to selling it as the developer seeks to cut liabilities, Reuters reported, citing a person with direct knowledge of the matter.
A dollar bond that creditors say is guaranteed by Evergrande is reportedly back in focus, according to Debtwire. Meanwhile the builder was told by regulators in Danzhou that it can’t repay debt with properties, Caixin reported. Shares of the company slid 10%, the most in more than a month.
Two major Chinese cities saw weak sales in their latest round of land auctions, signaling cash-strapped developers remain reluctant to bid even after local governments relaxed rules. Chinese high-yield dollar bonds were down 2 cents on the dollar Friday, according to credit traders. A gauge of real estate stocks slipped 3%, extending losses this year to 30%.
Key Developments:
- Evergrande’s Hui Cuts Stake for First Time in Race for Cash
- Major Chinese Cities See Tepid Demand at Latest Land Auctions
- Property Sector 45% of China’s 1H22 Offshore Maturities: Fitch
- Jumbo Fortune Holders May Invoke Evergrande Guarantee: Debtwire
- Kaisa’s Proposed Bond Swap Doesn’t Encourage Holders: HSBC
- China City Tightens Evergrande’s Property-for-Debt Deals: Caixin
- China Property Turmoil Risks Upending Nascent Green Debt Market
- China’s Property-Led Economic Slowdown Shows No Signs of Ending
- Chinese Estates Enters Loan Facility with CCB for Up to HK$610m
Evergrande’s Hui Sells 1.2 Billion Shares (5:12 p.m. HK)
China Evergrande Group Chairman Hui Ka Yan sold 1.2 billion Evergrande shares for the equivalent of $344 million on Thursday, according to a filing to the Hong Kong Stock Exchange. That pares his stake together with that of his wife to 67.87% from 76.96%, the filing showed Friday.
Hui sold the shares at an average HK$2.23 each, the filing showed. That was a 20% discount to the closing price on Wednesday. The document didn’t identify the buyers.
Chinese regulators have urged Hui to use his own wealth to help shore up the finances of his distressed property empire, which has liabilities exceeding $300 billion. He has injected more than $1 billion into Evergrande since July, mainly by disposing of personal assets and pledging shares, China Business News reported last week.
Major Chinese Cities See Tepid Land Auction Demand (3:50 p.m. HK)
Two major Chinese cities saw weak sales in their latest round of land auctions, signaling cash-strapped developers remain reluctant to bid even after local governments relaxed rules.
Plots offered by the municipal government in Shenzhen, the nation’s least affordable residential market, fetched just 5% more than the total asking price in auctions that ended Thursday, according to China Real Estate Information Corp. That’s down from 12% in the previous round in September and 31% in May.
All parcels were sold in the city, after purchasing restrictions were loosened slightly and the number of parcels supplied was halved from the prior round.
Evergrande Soccer Stadium Taken Over By Government: Reuters (2:10 p.m. HK)
China Evergrande Group’s soccer stadium has been taken over by a government body with a view to selling it as the embattled developer seeks to cut liabilities, Reuters reported citing a person with direct knowledge of the matter. Evergrande is also considering selling Guangzhou Football Club, according to the news agency. Evergrande declined to comment to Reuters.
The team’s lavish spending made veteran coach Marcello Lippi one of the highest-paid managers in the world. Now the club is seeking government aid to survive, and a Bloomberg Intelligence analysis in September estimated Evergrande’s soccer-related business to be worthless.
China’s Offshore Maturities in First Half 2022: Fitch (1:45 p.m. HK)
Property makes up 45% of Chinese firms’ offshore bond maturities in the first half of next year, according to Fitch, which added that repayment pressure will likely persist for those rated B+ and below.
Lower-rated firms’ access to the offshore primary market will “likely remain curtailed in the short run amid the severe fall in bond prices,” analysts including Shuncheng Zhang wrote in the report.
Jumbo Fortune Holders May Invoke Evergrande Guarantee: Debtwire (10:45 a.m. HK)
Evergrande has yet to comply with a condition involving a Jumbo Fortune private dollar bond, which could enable holders to re-invoke the builder’s guarantee on Nov. 30, Debtwire reported Thursday citing two sources.
The developer was supposed to have helped holders of the 8.5% note to monitor the debt’s underlying project onshore, but has “blamed the local government for not providing required certificates to make that possible,” Debtwire wrote, citing one of the sources. It said bondholders intend to send documents to reinvoke Evergrande’s guarantee of the note if it doesn’t meet the alleged condition failure by Monday.
Kaisa’s Proposed Bond Swap Doesn’t Encourage Holders: HSBC (10:30 a.m. HK)
Kaisa Group Holdings Ltd.’s proposed dollar-bond exchange provides limited incentives for bondholders to agree, and even if successful “is at best kicking the can down the road,” said HSBC.
Recent such efforts by fellow Chinese developers Modern Land China Ltd. and Yango were “more generous” than what Kaisa is offering, credit analysts including Reks Ng wrote in a report dated Thursday.
China City Tightens Evergrande’s Property-for-Debt Deals: Caixin (7:30 a.m. HK)
Regulators in Danzhou city in China’s Hainan province tightened oversight of Evergrande’s arrangements to repay debt with properties on concerns over the risks of such transactions, Caixin reported, citing the local authorities.
Evergrande was told by housing authorities in Danzhou this week that transactions using assets in the Ocean Flower Island project to repay unrelated debts will be prohibited.
Authorities plan to protect the Ocean Flower Island project liquidity and ensure its delivery, Caixin reported.
China Property Turmoil Risks Upending Nascent Green Debt Market (6:30 a.m. HK)
The debt crisis engulfing the Chinese real estate sector is threatening to upend developers that have borrowed billions in green debt to fund sustainable buildings.
Two prominent firms that are struggling to meet their debt obligations, Kaisa and Fujian Yango Group Co., now face “inevitable” default scenarios, according to S&P Global Ratings, which cut both issuers’ credit ratings deep into junk territory before withdrawing its assessment on both earlier this month. Together, the developers and their units sold at least $1.9 billion in ethical debt.
Kaisa faces a crucial test as it seeks to extend payment on a $400 million sustainability note due Dec. 7 to avoid a possible default or restructuring. A failed exchange could result in the first missed payment on a sustainability note by a Chinese borrower since at least 2018, Bloomberg-compiled data show.
China’s Property-Led Economic Slowdown Shows No Signs of Ending (6 a.m. HK)
China’s economy continued to slow in November with car and homes sales dropping again as the housing market crisis dragged on.
That’s the outlook from Bloomberg’s aggregate index of eight early indicators for this month. While the overall number stayed unchanged, under the surface there was a further deterioration in some of the real-time economic data.
Strong export demand has helped to partly offset the property slump, and the latest shipment figures from South Korea — a bellwether for global trade — suggest another solid month for the sector. However, the pace of increase slowed and other high-frequency global trade data also suggest an easing in demand.
Fantasia Says Winding-Up Petition Filed Against Unit Over Loan (6 a.m. HK)
Fantasia Holdings Group Ltd. says a winding-up petition was filed against its major subsidiary Fantasia Investment Holdings Company Ltd on Nov. 24 in connection with an alleged outstanding loan of $149 million, according to a filing to the Hong Kong stock exchange.
“The company will seek legal advice to protect its legal rights and interests and take all necessary measures including maintaining a constructive dialogue with the petitioner to address the matter,” it said.
A look at Evergrande’s maturity schedule:
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