Eyes on Sunac’s Local Payments After Default: Evergrande Update

2/2 © Bloomberg. Cranes at the Sunac Resort project under construction, developed by Sunac China Holdings Ltd., in Haiyan, Zhejiang Province, China, on Friday, Feb. 25, 2022. A widely-anticipated push by China's government to boost construction in order to stabilize growth in the world's second-largest economy has yet to materialize, a blow to hopes that Chinese stimulus would lift global growth early on this year. Photographer: Qilai Shen/Bloomberg 2/2

(Bloomberg) -- Investors are watching how Sunac China Holdings Ltd.’s dollar bond default will affect its ability to repay holders of its domestic debt, as distressed developers’ recent different treatment of creditors home and abroad has caught attention. 

Chinese junk dollar bonds fell for a seventh day Thursday, according to a Bloomberg index, the longest losing streak in two months. Refinancing concerns are flaring as defaults mount and inflation drives rates up globally.

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Key Developments:

• Moody’s Cuts Ratings of Greenland Holding to B2 From Ba3
• China’s White Knight Tycoon Can’t Save His Own Firm From Default
• Sunac May Prelude New Wave of Developer Defaults: Street Wrap
• Sunac China to Seek State-Backed Strategic Investors: HKET
• Country Garden’s Dollar Bonds, Shares Extend This Week’s Slide
• Major China Developer Sunac Misses Payment as Crisis Spreads (1)

China Developers Need Time to Issue Despite Policy Relaxation: BI (6:00 a.m. HK)

While policy relaxation on onshore bond issuance might lower refinancing risk, it could take time for the market to regain confidence, Bloomberg Intelligence wrote in a report. 

For non-state-owned-enterprise investment grade developers, only Longfor Group Holdings Ltd. and China Vanke Co. may be able to tap the market onshore based on current market levels. In the high-yield space, certain developers such as CIFI Holdings Group Co. and Seazen Group Ltd. are more likely able to tap the market, they said. 

Moody’s Downgrades Greenland Holding Rating (8:23 p.m. HK)

Moody’s cut the corporate family rating of Greenland Holding Group Company to B2 from Ba3, as it expects that the developer’s “refinancing risk will increase over the next 6-12 months, driven by its declining contracted sales and operating cash flow, as well as sizable bond maturities.” 

China’s White Knight Tycoon Can’t Save His Firm From Default (5:04 p.m. HK)

Sun Hongbin, dubbed the “white knight” in China for bailing out fellow billionaires and their empires, was unable to rescue his own from the property crisis that’s engulfing the world’s second-biggest economy.

Though he dipped into his own pocket to the tune of $450 million, tapped investors to buy shares and raised more than $2 billion in all, it wasn’t enough for Sun to avoid default at his Sunac China Holdings Ltd.

Jinke Properties Cut to B+ From BB- at S&P; Outlook Stable (3:57 p.m. HK)

S&P Global (NYSE:SPGI) Ratings has downgraded Jinke Properties Group Co. to B+ from BB- as the developer has less headroom to absorb adverse liquidity conditions, the rating firm said in a statement. The borrower used cash on hand to repay debt while sales declined in the past few months, it added. 

The tough operating environment may continue to pressure the developer’s sales and profit margins, leading to weakening credit metrics, S&P said.

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