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Bond Market News
Chinese Property Developers’ Dollar Bonds Trend Lower Amid Weak Sentiment
July 6, 2023
Dollar bonds of Chinese developers like Sino-Ocean, Road King, COGARD, Shimao and others continued to drop amid the persistent weakness and negative market sentiment towards the sector. Defaulted developer Shimao’s $1.8bn land portfolio failed to find a buyer at an auction despite being offered at a 20% discounted value. The land was bought by Shimao in 2017 for RMB 24bn ($3.3bn). Last week, China Vanke, the nation’s second-largest developer by sales said that the domestic real estate market was “worse than expected”. Amid the weakness, Goldman Sachs expects a higher default rate for Chinese high-yield property dollar bonds than earlier forecasted. Anitza Nip, head of fixed income research at Union Bancaire Privee’s for Asia said, “Investors are disappointed with the slow recovery of the housing market. The recovery path appears to be even longer than what the market had initially anticipated earlier this year”. Sino-Ocean is said to be undergoing due diligence for a potential debt restructuring that saw its dollar bonds drop over 2 points yesterday. Besides, others like KWG, CCRE have either defaulted or suspended payments on offshore bonds. Road King’s dollar bonds fell the most yesterday, with its 5.2% 2026 down over 4.2 points to trade at distressed levels of 46.7 cents on the dollar.
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