Chinese developers' shares, bonds stumble again as Kaisa, units suspended

Reuters

Published Nov 05, 2021 02:38

Updated Nov 05, 2021 05:55

HONG KONG/SHANGHAI (Reuters) - A rout in shares and bonds of Chinese property developers deepened on Friday as Kaisa Group Holdings Ltd and three of its units had their shares suspended, a day after Kaisa said an affiliate had missed a payment on a wealth management product.

Shenzhen-based homebuilder Kaisa, which has guaranteed the wealth management product, said in a statement on Thursday it is facing unprecedented liquidity pressure due to a challenging property market and rating downgrades.

A Hong Kong stock exchange filing showed Kaisa's shares were suspended as of Friday. The exchange did not elaborate.

Kaisa's troubles come amid concerns about a broadening liquidity crisis in the Chinese property sector, with a string of offshore debt defaults, credit rating downgrades and sell-offs in the developers' shares and bonds in recent weeks.

The Hong Kong-listed shares of Kaisa, which has a market value of about $1 billion, plunged more than 15% on Thursday to an all-time low.

In early trade in Hong Kong, a sub-index tracking the mainland property sector fell more than 2%, deepening its losses in the past two weeks to nearly 20%. An index of real estate A-shares fell more than 1.6% against a 0.25% drop in the broader blue-chip index.

Shares of China Evergrande Group, once China's largest property developer and whose debt woes have sparked off a liquidity crisis across China's $5 trillion property sector, fell 1.7%. The company's 11.5% October 2022 bond fell more than 10% to yield above 300%, according to Duration Finance, leading sharp falls across developers' bonds.

An ETF tracking Asian high-yield dollar bonds slumped nearly 1.5% in early trade, while spreads on Chinese high-yield dollar debt hovered near record highs.