Update | Chinese developer Agile Property cancels HK$2.8 billion rights issue
Developer cancels HK$2.8b issue after rating is put on negative watch, days after suspension of shares with no sign of 'missing' chairman
Beleaguered mainland developer Agile Property yesterday called off its HK$2.8 billion rights issue, after Standard & Poor's put its long-term credit rating on negative watch for lack of explanation about its share suspension and growing refinancing risk.
"We don't have a clue how long the suspension will last and why. That's the most important issue and the biggest uncertainty," said Bei Fu, a senior property analyst at global ratings agency S&P .
Agile shares have been suspended from trading since October 3 amid market rumours that chairman Chen Zhuolin has gone missing.
"The rating action is not about a gradual deteriorating of its credit profile; rather it relates to an event risk associated with the share suspension … We believe Agile's share suspension could continue next week."
S&P put Agile's BB long-term corporate credit rating on negative watch on Thursday.
Other mainland developers such as Country Garden and Yuexiu Property, however, are on track with their rights issues, with analysts expecting more developers from across the border to come to the market for funds to fix their balance sheets. Country Garden last night said its rights issue had been 8.8 times oversubscribed.
John White, a managing director of global real estate fund manager Heitman, called these rights issues a "painful dilution" of earnings and dividends, adding he has long been worried about the aggressive debt-driven expansion of mainland developers.