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Thursday, March 30, 2023

Evergrande suspends bond trading after the latest downgrade

After the rating downgraded the previous day, the capital-strained Chinese developer Evergrande Group applied for suspension of trading of its onshore corporate bonds on September 16.

Evergrande’s property service provider and subsidiary Evergrande Real Estate Group found on Wednesday that the rating of its bonds had been downgraded from AA to “A”.

According to Evergrande, the rating agency China Chengxin International (CCXI) included the bond and its issuer on the watch list for further downgrades.

Evergrande requested that its domestic corporate bonds be suspended for one day.

After trading resumes on September 17, its Shanghai and Shenzhen Stock Exchange bonds will only be traded through limited negotiated transactions.

The latest application was issued after repeated trading freezes due to trading volatility in recent days. However, according to market analysts, the recent suspension may indicate an increased likelihood of default and debt restructuring.

In addition to real estate development, Evergrande Group is interested in sports, health and tourism industries. The real estate giant has more than $300 billion in debt. If the current restructuring efforts fail, it is on the verge of collapse and is scrambling to raise funds.

These effects are expected to have a profound impact on the real estate, banking and iron ore industries.

Two weeks ago, China Chengxin International downgraded the rating of Evergrande and its onshore bonds from AAA to AA, erasing the value of the bonds when attempting to conduct repurchase transactions.

On September 7, Fitch Ratings marked the company’s “possible” default.

In July, China Chengxin International lowered the outlook for China’s real estate industry from stable to negative for the first time.

Reuters contributed to this report.

Li Lita is a reporter from The Epoch Times, focusing on China-related topics. She started writing for the Chinese version in 2018.


This News Originally From – The Epoch Times

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