Sunac China bonds sink deeper into distress on Fitch’s second downgrade amid refinancing woes
- Most-active dollar bonds fell to less than a fifth of their face value, signalling heightened default risks
- Downgrade reflects increasing uncertainty over access to capital market to repay maturing debt, Fitch says
The rating cut came as the nation’s third-largest home builder said trading in its seven yuan-denominated bonds listed in Shanghai would be restricted to only institutional investors. The designation means retail investors would only be allowed to sell and not buy them.
Fitch on Tuesday slashed the developer’s credit rating deeper into junk territory, lowering it by three steps to B- from BB- and putting its debts on negative watch. The rating firm had earlier cut its rating by one step on January 19, heightening the repayment risk.
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“The downgrade reflects increasing uncertainty over the refinancing of Sunac’s onshore and offshore capital-market debt maturing over the next few months amid decreasing market confidence, as well as falling contracted sales,” Fitch said in a statement.
Sunac’s 7.25 per cent note due June 2022 fell 25 US cents on the dollar to 20 cents, according to Bloomberg data, while its 8.35 per cent note due April 2023 lost 11 cents to 14 cents. Both securities fetched about 60 to 80 cents a month ago. They are the most-active among its 12 outstanding dollar-bonds with a face value of US$7.7 billion.
The developer’s yuan bonds fell more than 20 per cent in Shanghai on Wednesday before paring losses, according to exchange data. Sunac declined to comment when contacted by the Post about the downgrade.
