(Bloomberg) — China Evergrande Group’s stock and bonds tumbled amid signs a long-awaited debt restructuring may be at hand, while Kaisa Group Holdings Ltd. faces a potential default this week in major tests of China’s ability to limit fallout from the embattled property sector.
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Evergrande said in a filing late Friday that it plans to “actively engage” with offshore creditors on a restructuring plan. That as grace periods on two dollar bond payments end Monday. Kaisa, meanwhile, failed to win bondholder approval for a debt swap, putting the firm on course for a default unless it can reach a last-minute agreement with creditors.
Evergrande shares plunged 12% to an 11-year low in Hong Kong and its dollar bonds dropped about 1 to 5 cents across the curve, according to traders. The firm’s 9.5% note due 2022 fell 4.9 cents on the dollar to 22.1 cents, set for the biggest drop since mid-September. Yields on an index of China junk bonds jumped back above 22% Friday.
Key Developments:
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Can China’s Developers Just ‘Lie Flat’ and Default?: Shuli Ren
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Evergrande’s Possible Restructure May Hurt Equity Holders: React
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Clock Is Ticking on China Evergrande’s Debt Crisis: QuickTake
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Evergrande Says Formulating Restructuring Plan of Offshore Debt
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China’s Mortgage Rate Slide May Pave Way for Home Sales Recovery
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Kaisa Moves Closer to Default After Bondholders Reject Swap
Developers Rise as Regulator Assures on Evergrande Risk (11:30 a.m. HK)
Several Chinese property developers advanced after a report over the weekend showed November loans increased for a second month, and the nation’s securities regulator stated it would support the reasonable financing needs of developers. In Hong Kong, Sunac China Holdings Ltd. rose as much as 7.1%, Shimao Group Holdings Ltd. was up 7.3% and Country Garden Holdings Co. added 6.4%.
Evergrande Moves Toward Restructuring as Deadline Looms (7:50 a.m. HK)
Evergrande’s long-awaited debt restructuring may finally be at hand, posing a fresh test for Xi Jinping’s government as it tries to rein in the country’s financial excesses without derailing economic growth.
The embattled developer said in an exchange filing late Friday that it plans to “actively engage” with offshore creditors on a restructuring plan, offering its most explicit acknowledgment yet that its $300 billion of overseas and local liabilities have become unsustainable.
A barrage of statements from Chinese regulators — several of which landed just minutes after Evergrande’s announcement — suggested authorities are striving to contain the fallout on homeowners, the financial system and the broader economy rather than orchestrate a bailout.
The government of Guangdong, the southern province where Evergrande is based, summoned founder Hui Ka Yan to express concern over the company’s announcement and said it would…
Read More: Debt Restructuring Looms; Kaisa Bond Deadline: Evergrande Update