Evergrande Suspends Bond Trading After Latest Downgrade

By Rita Li
Rita Li
Rita Li
Rita Li is a reporter with The Epoch Times, focusing on China-related topics. She began writing for the Chinese-language edition in 2018.
September 16, 2021 Updated: September 16, 2021

Cash-strapped Chinese developer Evergrande Group has applied for a suspension of trade of its onshore corporate bonds on Sept. 16, following a ratings downgrade a day earlier.

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

According to Hengda, the rating agency, China Chengxin International (CCXI), put both the bond and its issuer on a watchlist for further downgrades.

Hengda asked to suspend trade of its onshore corporate bonds for one day.

Upon resumption of trade on Sept. 17, its Shanghai and Shenzhen exchange-traded bonds will only be traded through limited negotiated transactions.

The most recent application comes after repeated trading freezes in recent days due to volatile trade. Yet, according to market analysts, the latest suspension could indicate an increased likelihood of default and debt restructuring.

Besides real estate development, Evergrande Group has interests across the sporting, health, and tourism industries. With liabilities to the tune of over $300 billion, the property giant is scrambling to raise funds as it teeters on the brink of collapse if current restructuring efforts fail.

The impacts are expected to be far-reaching across both the real estate, banking, and iron ore sectors.

Two weeks ago, CCXI downgraded Evergrande and its onshore bonds from AAA to AA, erasing the bonds’ value as it attempted to engage in repurchase trading.

On Sept. 7, Fitch Ratings flagged a “probable” default for the company.

In July, CCXI revised its outlook for the first time on China’s real estate sector from stable to negative.

Reuters contributed to this report.

Rita Li
Rita Li is a reporter with The Epoch Times, focusing on China-related topics. She began writing for the Chinese-language edition in 2018.