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Shimao Group Holdings Ltd. agreed to sell stakes in a Hong Kong development at a loss while Sunac China Holdings Ltd. unloaded assets in Shanghai as developers seek to raise cash to pay debt.
An index of Chinese dollar junk bonds fell for a fifth day Friday, while property stocks were little changed in Hong Kong. The rout in developer shares means the richest bosses behind China’s real estate firms have lost more than $46 billion combined this year, according to the Bloomberg Billionaires Index. Evergrande founder Hui Ka Yan’s wealth alone has plunged by $17.2 billion.
Key Developments:
China Regulators Encourage Property Acquisitions: Report (9:15 a.m. HK)
China encourages “quality companies” to step up acquisitions and purchases of property projects based on market-oriented principles, Cailian reported, citing a notice from the central bank and Chinese regulators. The regulators also encouraged financial institutions to provide services for these acquisitions to help dissolve risks.
Kaisa Appoints Advisers; Shares Resume Trading (8:10 a.m. HK)
Kaisa has appointed Houlihan Lokey (NYSE:HLI) (China) Ltd as its financial adviser and Sidley Austin as legal adviser after missing multiple offshore debt payments.
The financial adviser will evaluate Kaisa’s liquidity and explore all feasible solutions, the company said in a stock exchange filing on Monday. Kaisa said it hasn’t received any notice regarding acceleration of repayment by holders, and has been in talks with holder representatives about a comprehensive debt restructuring plan. The shares dropped 6.5% in early Hong Kong trading.
Evergrande Backer’s Privatization Collapses (8:05 a.m. HK)
Chinese Estates Holdings Ltd. minority shareholders failed to give sufficient support to the company’s proposed privatization, derailing a plan by the long-time ally of Evergrande to delist next month. The stock plunged 33%.
Among the 74 stockholders participating, 64 voted no and made up 10.8% of the shares among the investors, according to a stock exchange filing Friday. The Hong Kong real estate firm, owned by the family of billionaire Joseph Lau, announced plans in October to buy out investors at HK$4 a share. The stock last traded at HK$3.78 before being halted Friday afternoon ahead of the results. Chinese Estates requested a trading resumption and said its listing will be maintained.
Evergrande Declared in Default by S&P for Failed Payments (8 a.m. HK)
Evergrande was labeled a defaulter by S&P Global (NYSE:SPGI) Ratings, the second credit-risk assessor to do so.
S&P cut Evergrande to “selective default” over its failure to make coupon payments by the end of a grace period earlier this month, a move that may trigger cross defaults on the developer’s $19.2 billion of dollar debt. S&P also withdrew its ratings on the group at Evergrande’s request.
Fitch Ratings was the first to declare the property developer in default on Dec. 9. Long considered by many investors as too big to fail, Evergrande has become the largest casualty of President Xi Jinping’s campaign to tame the country’s overindebted conglomerates and overheated property market. Concern has since spread to higher-rated firms like Shimao Group as liquidity stress intensifies.
Shimao Sells Stake in Hong Kong Development (7:30 a.m. HK)
Shimao agreed to sell its 22.5% stake in three entities created for the Grand Victoria property development in Hong Kong for HK$2.1 billion ($270 million), according to an exchange filing.
The buyers include entities owned by fellow developers SEA Holdings, Wheelock & Co. and Sino Land. Shimao expects to recognize a loss of about HK$770 million from the sale.
Separately, Sunac China Holdings Ltd. sold three projects in Shanghai and Hangzhou for 2.68 billion yuan ($420 million), the 21st Century Business Herald reported, citing unidentified people.
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