Now its onshore notes continue to price in even greater risk: a local note sold by its onshore unit due 2022 is priced at about 42 yuan Tuesday, while an offshore bond also due in 2022 is at about 76 cents on the dollar. Such worries have driven wild swings in the firm’s offshore bonds in recent months. Liquidity risk concerns have persisted, even after a recent share placement and the firm’s pledge of its Shanghai headquarters for financing. It develops residential, hotel, office and commercial properties, according to its website.Ĭredit assessors have repeatedly slashed their views on Shimao, pushing the borrower into so-called fallen angel territory. Shimao Group Holdings is China’s 13th biggest developer by contracted sales and among the largest property debt issuers in China, with about $10.1 billion in outstanding local and offshore bonds. That’s after a Shimao Group unit announced the sale of its property management assets to Shimao Services on Monday-a move JPMorgan said implied tight liquidity for Shimao and was a “corporate governance red flag.” What’s the company? Shares of Shimao Group and its services unit have been cut to underweight over “heightened concerns on liquidity,” by JPMorgan, citing concern property managers are being used as financial tools by developers such as by Shimao and Sunac China Holdings.
With better access to funding, such builders have been more protected from the liquidity crisis that has rippled through the sector, sparked by a government crackdown on excessive borrowing by developers and speculation in the housing market. were officially labeled defaulters, the worries over Shimao stand out partly because it was once considered a stronger borrower among property firms. Declines continued on Tuesday.Ĭoming less than a week after China Evergrande Group and Kaisa Group Holdings Ltd. Trading was halted in six of the company’s yuan bonds after they tumbled, with one falling more than 50%.
Rising anxiety over Shimao’s ability to service its debt prompted the dramatic selloff on Monday, which spread to other firms.
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