Jumbo Mortgages

Bonds Drop as Jumbo Collectors But to Be Paid: Evergrande Replace

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(Bloomberg) – China Evergrande Group’s dollar bonds fell after people familiar with the matter said some creditors have not yet received repayment of a bond they claim is guaranteed by the developer.

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Evergrande’s 2022 bond lost 0.8 cents to 23.5 cents against the dollar, prices compiled by Bloomberg showed on Thursday. Failure to pay the principal of the bond may constitute default as the bond has no grace period, although five business days would be granted if the non-payment were due to an administrative or technical error. The bond was issued by Jumbo Fortune Enterprises for an initial amount of $ 260 million.

Fantasia Holdings Group Co.’s surprise default this week suggests the industry’s funding troubles may be “worse than expected,” warned analysts at Goldman Sachs Group Inc. The missed payment is causing investors to wonder if if other developers are in similar positions, the analysts wrote in a note.

Chinese Estates Holdings Ltd. rose as much as 32% in Hong Kong after the Lau billionaire family offered to make their investment firm private. Chinese Estates have been long-time supporters of the China Evergrande Group but have recently reduced their stake. The shares of Chinese estates had been stopped since September 29th.

Important developments:

  • Holders of an Evergrande-linked Jumbo Fortune bond still have to be paid

  • Evergrande Backer Chinese Estates go private after the break-in

  • Fantasia opens a Pandora’s box for Evergrande: Shuli Ren

  • China’s High Yield Dollar Bonds Fall Up To 5 Cents: Traders

  • A surprise default in China exacerbates Evergrande’s contagion fears

  • Potential Evergrande deal puts Hopson’s finances at risk

  • CST Group to sell 32.18 million Evergrande vehicle shares

  • China’s developers have a price to pay for meltdown as the risk of contagion spreads

  • Chinese real estate developer Fantasia misses debt payments

Mortgage Backed Securities Are Shielded (2:53 PM HK)

The story goes on

Mortgage-backed residential properties in China rated by S&P Global Ratings will not be affected by the likely default by the China Evergrande Group, the rating company said in a statement. Rated deals are supported by existing houses and are therefore not subject to any construction risk, said S&P.

Evergrande-Linked Jumbo Fortune Bond Holders Still To Be Paid (2:53 p.m. HK)

Failure to repay the Jumbo Fortune bond could be Evergrande’s first major failure in maturing debt since regulators urged them to avoid a short-term default. The company is a joint venture owned by the Hengda Real Estate Group, Evergrande’s main onshore entity. Details of the guarantees are not generally known as the prospectus is not publicly available and the transaction was not listed on any stock exchange.

Still no disclosure (1 p.m. HK)

Evergrande had not announced any details about its “big deal” at 1pm on Thursday. That means the stock and that of its real estate services unit will be suspended until at least Friday under the rules of the Hong Kong Stock Exchange. However, trading stops in Hong Kong can last weeks or even months as the exchange does not set a specific deadline.

Evergrande’s shares were last traded on September 30th. Hopson Development Holdings Ltd. plans to acquire 51% stake in Evergrande Property Services Group Ltd. the Chinese media platform Cailian reported earlier this week, citing unknown persons.

Goldman warns of funding after Fantasia Default (11:30 a.m. HK)

Developer funding stress could worsen and refinancing worries could become a broader issue next year, wrote Goldman analysts, led by Kenneth Ho. Citigroup Inc. analysts agree and wrote earlier this month that the Chinese Government under pressure to address the credit crunch facing indebted property developers before January, when bond repayments will skyrocket.

Citigroup estimates 15 of the most stressed-out real estate developers in the country will mature at $ 5.2 billion earlier this year. Most of these are principal payments on dollar bonds rather than interest or coupons, which adds to the urgency. The total is more than double what it was in October, a month when companies are already struggling to pay off their debts.

Chinese Estates, Evergrande Units Rise (9:30 a.m. HK)

Chinese Estates’ shares rose as high as HK $ 3.84 each, which is below the take-private offer price of HK $ 4. The family of billionaire Joseph Lau – a longtime supporter of Evergrande – offered to buy the 25% stake they do not already own in Chinese Estates. Most recently, the stock fell to an 18-year low.

China Evergrande New Energy Vehicle Group Ltd., the volatile electric vehicle unit majority-owned by Evergrande, rose as much as 17% on Thursday. HengTen Networks Group Ltd., in which Evergrande holds 26.55% of the shares, even rose by 11%.

Southbound purchase from Evergrande (6pm HK)

According to Bloomberg Intelligence, mainland investors have been buying shares of Chinese real estate firms in Hong Kong through stock exchanges, with Evergrande and its real estate services unit exceeding inflows prior to its suspension. The connection to the south will reopen on Friday after a week-long vacation in China.

“Purchases going south may be fueled by bargain hunting and hope that developers’ debt crises will be resolved in an orderly fashion,” said Bloomberg Intelligence analyst Marvin Chen. Chinese investors bought more than 300 million shares in Evergrande and its real estate services business.

Interest periods for Evergrande dollar bonds:

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