Offshore bondholders of beleaguered developer China Evergrande Group were on Monday bracing for news on more than $148 million in looming bond coupon payments after the company missed two coupon deadlines last month.
Evergrande contagion worries affecting the broader Chinese property sector spilled into heavy selling of Chinese high-yield dollar debt last week, particularly after smaller developer Fantasia Holdings Group CoThe option-adjusted spread on the ICE BofA Asian Dollar High Yield Corporate China Issuers IndexFantasia Group China Co said on Monday it will adjust the trading mechanism of its Shanghai-traded bonds following credit downgrades by China Chengxin International Credit Rating Co , and said...
The move comes after the Shanghai Stock Exchange on Friday paused trading of two of Fantasia Group's exchange-traded bonds following sharp falls, and echoes a similar adjustment in trading of Evergrande's onshore bonds last month. "We believe policymakers have zero tolerance for systemic risk to emerge and are aiming to maintain a stable property market, and policy support could be forthcoming if the deterioration in property activity levels worsen," said Kenneth Ho, head of Asia Credit Strategy at Goldman Sachs.
"That said, we also believe that policymakers do not want to over-stimulate, and their longer term goal is to deleverage the property sector. Finding the right balance may require more time, and the uncertainties are likely to be a continued source of volatility for the China property market."Sign up for our newsletter
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