Tuesday, January 18, 2022

China's Property Sector Is Crashing Again And This Time It Has Reached The Country's Biggest Developer

The crisis engulfing China's property sector - which has prompted Beijing to capitulate on its tightening ambitions yet again, and forced China to launch an increasingly more aggressive easing campaign, which so far culminated in the first rate cut in Chinese official rates in almost two years - has impacted the country's biggest developer, sending the shares and bonds of Country Garden Holdings - which is even bigger than Evergrande - plunging amid fears that a reportedly failed fundraising effort may be a harbinger of waning confidence.

At least until now... and now that Shimao has imploded, Country Garden remains perhaps the final and most visible bellwether for contagion risk, as unprecedented levels of stress in the offshore credit market threaten to drag good credits down with bad. Since taking the top spot from China Evergrande Group in 2017, Country Garden has remained the nation's largest developer in China by contracted sales.

According to Bloomberg, it has the largest pool of outstanding US dollar bonds among China's biggest property firms, excluding defaulters, with some US$11.

The selling in Country Garden's bond accelerated last week after the company struggled to tap the market for fresh funds, reportedly pulling a $300 million convertible bond issue due to weak demand.

The news hammered Logan's note due 2023 which sank 14.1 cents to a record low 62.9 while Country Garden's shorter-dated bond due 2024 tumbled 12.9 cents to 67.7 cents, extending last week's selloff for the country's biggest developer.

While Logan, whose bonds traded at close to par as recently as last month, and which rated the equivalent of a BB rating at all three major credit risk assessors, denied both the report and market speculation the company has privately sold debt, that did little to ease the puke in its bonds which quickly spilled over to the rest of the property segment.

With bond yields of property developers at stratospheric levels, Chinese property firms need to repay or refinance some $99 billion of local and offshore bonds this year.

https://www.zerohedge.com/markets/chinas-property-sector-crashing-again-and-time-it-has-reached-countrys-biggest-developer 

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