China

A growing number of cities in China have tightened supervision over the use of presold property proceeds, a move likely to deepen the cash crunch at many of the country’s real estate developers that have relied on the inflows as a key source of funding, Bloomberg News reported. Major cities including Beijing, Tianjin and Shijiazhuang as well as smaller municipalities like Suzhou and Nantong in the eastern province of Jiangsu, and Luohe in central Henan province have issued rules tightening oversight of the proceeds, according to a China Business News report and government statements.

Chinese property developer Kaisa Group Holdings Ltd. plans to speed up asset disposals to meet investor obligations, after the indebted company missed a payment on a wealth-management product last week, the Wall Street Journal reported. The Shenzhen-based company has sufficient “high-quality assets” it can tap to make the payments, Kaisa said in a statement on its website late Monday, adding that it would seek to sell assets in Shenzhen, Shanghai and other places.

Sino Ocean Group Holding Ltd., part-owned by the finance ministry, has become the latest property company to see its bonds slump. Its 4.75% note due 2030 fell Monday to as low as 73.48 cents on the dollar, with spreads over comparable Treasuries widening to a record 800 basis points, according to data compiled by Bloomberg. That’s despite the firm being rated investment-grade at two global credit assessors and holding about 54 times more cash and equivalents than China Evergrande Group. Sino Ocean’s shares have been doing better, rebounding 35% from their September low. They rose 3.5% Monday.

Kaisa Group Holdings Ltd. plans to sell property assets valued at almost $13 billion to raise capital after the cash-strapped Chinese developer flagged liquidity stress and missed payments on investment products, Bloomberg News reported. The company has put 18 projects covering 1.45 million square meters (15.6 million square feet) in Shenzhen up for sale, with a total value estimated at 81.82 billion yuan ($12.8 billion), according to people familiar with a briefing by Kaisa’s executives to retail investors on Thursday.

Kaisa Group Holdings Ltd.’s bonds and shares tumbled after a wealth-management product guaranteed by the company missed a payment deadline, Bloomberg News reported. China’s dollar high-yield debt fell for the 10th day in 11 after yields climbed above 21%. Trading was halted in two yuan bonds from other real estate firms after they plunged more than 20%. Spiking borrowing costs are making it all but impossible for developers to refinance debt, while property market curbs are weighing on home sales.

For more than a year, residents living in a remote border town have been China’s foot soldiers in the battle against the coronavirus, enduring lockdown after lockdown to shield the rest of the country from contagion, the Wall Street Journal reported. Mothers in Ruili, a jewelry-trading center on China’s border with Myanmar, post despairingly about their toddlers being numb to regular swab tests—one said her 2-year-old has gotten 100 in his lifetime. Others post about spending months on end in isolation, despite test after test coming back negative.

Property developers in China looking to raise badly needed cash by selling assets are finding it hard to strike deals as potential buyers in the sector hoard funds after home sales plunged and Beijing stepped up its borrowing crackdown, Bloomberg News reported. China Evergrande Group last month ended discussions to sell a controlling stake in its property-management business that would have raised about $2.6 billion. A plan to unload a trophy office tower in Hong Kong also stumbled, while Modern Land China Co.

Chinese developer Modern Land said on Monday a default on a bond repayment last week has pulled forward repayment dates for a further $321 million worth of notes, and the company withdrew an interim dividend to hold on to cash, Reuters reported. The development highlights the impact of China Evergrande Group, which narrowly averted a costly default, on the rest of the high-yield sector as liquidity dries up and sales slow. Modern Land said last week it had not repaid principal and interest on its 12.85% senior notes with an outstanding principal of $250 million.

China Evergrande Group avoided default for a second time by making an overdue interest payment on dollar bonds shortly before the end of a 30-day grace period, the Wall Street Journal reported. Evergrande, one of China’s largest real-estate developers, made a coupon payment that was originally due on Sept. 29, the people said. Evergrande was on the hook to pay about $45 million of interest on $951 million of bonds, which have a 9.5% coupon and mature in 2024, according to CreditSights research.

China’s largest cross-border brokers plummeted in U.S. trading after a central bank official questioned the legitimacy of their operations amid Beijing’s continuing crackdown on private enterprise, Bloomberg News reported. These online brokers are engaged in “illegal financial activities” because they have no “driving licenses” to operate in China, Sun Tianqi, a senior People’s Bank of China official wrote in an article published on the website of Finance 40 Forum. Sun didn’t name the brokers, and added that calling them illegal has nothing to do China’s capital control rules.