Sunac, Shimao and Oceanwide roiled in the capital markets amid concerns about ongoing cash crunch among China’s leveraged developers
- Sunac Holdings’ shares and bonds slumped as the developer’s stakes in two companies were frozen by a Shenzhen district court
- China high-yield bonds fall to the lowest level since September 2015, as Shimao and Oceanwide problems continue
Several Chinese developers were roiled in the capital markets amid concerns about the ongoing cash crunch among the heaviest borrowers, even after China’s monetary authorities eased the grip on the nation’s financial liquidity to stimulate the economy.
The bonds and shares of Sunac Holdings slumped after its stakes in at least two companies were frozen by a court in Shenzhen.
Sunac’s US$600 million offshore bonds due on January 26, 2026 slumped to a record low of 46.792 cents on the dollar, while its US$600 million bond due June 14 slid to 63 cents on the dollar, close to a record low. The Beijing-based company’s shares in Hong Kong lost 3.1 per cent to HK$11.80.
Sunac’s stake in Shanghai Sunac Property Development Company was frozen by the Shenzhen Baoan District court on January 5, while a 50 million-yuan stake in Wuhan Sunac Jiye Holdings Company was frozen on January 7, both for three years, according to Tianyancha, a company information and data provider.
The tumult, which amounted to “a small dispute with the partner, had been resolved,” Sunac said in a statement, adding that both parties were “actively working in accordance with the procedures to unfreeze Sunac’s stakes.”
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Since then, the cash crunch among Chinese developers metastatised throughout the industry, affecting Fantasia Holdings Group, Kaisa Group Holdings and Modern Land, among many others.
Bloomberg’s Asia Ex-Japan USD Credit China High-Yield Index slid to the lowest level since September 8, 2015. It came after an almost 5 per cent drop last week, the biggest weekly decline in nine weeks.
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Shares of Shimao Group Holdings shed 3.5 per cent in Hong Kong after the Shanghai developer’s credit rating was downgraded to B- from BB by Fitch Ratings, and by Moody’s to B2 from Ba3. Shimao’s note due 2027 was indicated at 35 US cents, set for a record closing low, according to Bloomberg.
China Oceanwide Holdings fell 5.7 per cent in Hong Kong, after a wholly-owned subsidiary of the Beijing-based developer defaulted on a loan. The subsidiary failed to pay US$1.28 million accrued interest and servicing fee on a loan, which was due this month. It triggered the demand of full payment of US$165 million with accrued interests, legal fees and other expenses, according to a statement to the Hong Kong stock exchange.
