China junk bonds suffer worst slide of 2023 on repayment woes

  

China junk bonds suffer worst slide of 2023 on repayment woes; Sino-Ocean, Wanda, Shui On bear brunt of the selling

    State-backed Sino-Ocean Group proposed repaying a local note due August 2 in instalments over one year.

    Wanda’s bonds due July 23 plunged 12 cents to 55 cents and Shui On’s 5.5 per cent note due 2025 slumped 10 cents to 57.4 cents on debt concerns.

China’s high-yield dollar bonds are suffering their sharpest three-day sell-off this year, as fresh repayment problems among developers spread.

The securities slid about 1 cent Wednesday morning, according to credit traders. That leaves an index tracking the notes set for its worst three-day decline since November.

The latest sign of debt repayment problems came as state-backed Sino-Ocean Group proposed repaying a local note due August 2 in instalments over one year. Debt concerns from property firms Dalian Wanda Group and Shui On Land also continued to roil the market.

The declines mark a shift from last week when the gauge advanced as authorities took further steps to support the ailing sector, including an extension of outstanding loans. But the market was thrown into fresh turmoil as Wanda warned of a funding shortfall just days before a key dollar-bond payment. Shui On added to the jitters with its move to identify bondholders, often seen as a prelude to payment delays.


China’s high-yield dollar bonds are suffering their sharpest three-day sell-off this year, as fresh repayment problems among developers spread.

The securities slid about 1 cent Wednesday morning, according to credit traders. That leaves an index tracking the notes set for its worst three-day decline since November.

The latest sign of debt repayment problems came as state-backed Sino-Ocean Group proposed repaying a local note due August 2 in instalments over one year. Debt concerns from property firms Dalian Wanda Group and Shui On Land also continued to roil the market.

The declines mark a shift from last week when the gauge advanced as authorities took further steps to support the ailing sector, including an extension of outstanding loans. But the market was thrown into fresh turmoil as Wanda warned of a funding shortfall just days before a key dollar-bond payment. Shui On added to the jitters with its move to identify bondholders, often seen as a prelude to payment delays.


A Wanda unit’s security due July 23 plunged 12 cents to 55 cents on Wednesday as of 11:18am in Hong Kong, sliding deeper into the distressed territory. Shui On’s 5.5 per cent note due 2025 slumped 10 cents to 57.4 cents.

A Bloomberg Intelligence gauge of Chinese developer shares edged down Wednesday after closing 3 per cent lower in the previous session.

The nation’s weakening property sales are heaping more pressure on developers’ finances, wrote Eric Zhu, an economist for Bloomberg Economics. “An extension of existing funding support for developers goes in the right direction but probably isn’t enough,” he said.