China

A Chinese program providing state guarantees to developer bonds will be put to the test this week, when payments come due from one of the most indebted builders, Bloomberg News reported. The sum owed by Country Garden Holdings Co. is relatively small — 65.95 million yuan ($9.1 million) for two interest payments. Both notes are guaranteed by China Bond Insurance Co., a state-owned credit-support provider at the heart of a program introduced by authorities in August 2022 to help private developers avoid liquidity crunches.

One of China’s most-watched developers has told some investors that it readied cash for an upcoming yuan bond payment, a move that may boost a firm that’s faced concern about its liquidity amid a broader property debt crisis. State-backed builder China Vanke Co. told some investors recently that it has readied cash to repay its 1.45 billion yuan ($201 million) note due May 25, according to people familiar with the matter.

China Evergrande Group flagged a delay in publishing its annual results as its liquidators are taking time to "ascertain the current state of affairs" of the embattled property developer, Reuters reported. Preparation of the financial statements of the company for the year ended Dec. 31, 2023, and the publication of the 2023 annual report have been delayed, the cash-strapped firm said in an exchange filing on Tuesday. Evergrande's shares, which were suspended from trading on Jan. 29 this year, will continue to remain suspended.

China Vanke Co. will exit non-core operations and divest assets as the developer seeks to boost liquidity amid the sector’s unprecedented downturn, according to a memo from a shareholder meeting on Tuesday, Bloomberg News reported. The company will “trim down” and adjust its model for raising money, Chairman Yu Liang said in the meeting. It will also exit all businesses except for the three main operations, which focus on property development, real estate management services and rentals.

China’s central bank has advised some regional lenders to curtail their ultra-long bond investments to mitigate risks, Bloomberg News reported. City and rural commercial banks in at least two eastern provinces were instructed in recent weeks to avoid significant exposure to these securities. Under the guidance from local branches of the People’s Bank of China, the regional banks have also been asked to reduce duration and leverage on bond holdings.

In 2019, a little-known Chinese carmaker named Zhido went bust after Beijing cut subsidies for the tiny electric cars it made, crushing its sales. Now it is back. Earlier this month, the company released a boxy new mini-electric vehicle called “Caihong,” or “Rainbow” in Chinese, which comes in seven pastel colors—including “Mint Mambo”—and has a starting price equivalent to around $4,400, the Wall Street Journal reported.

Shares in Jinke Property Group plunged by the exchange-imposed limit today after the troubled Chinese developer’s bankruptcy restructuring filing was accepted by a court in Chongqing, Yicai Global reported. It is the first time that the bankruptcy re-organization by a large developer has been accepted by a Chinese court and makes Jinke the first mainland-listed developer to enter the restructuring process. Jinke’s share price was trading down 5 percent today at CNY1.14 (USD0.16), the daily limit imposed by the stock exchange on companies at risk of delisting.

China has taken another step to limit domestic investors’ exposure to offshore debt issued by local government financing vehicles, Bloomberg News reported. The National Association of Financial Market Institutional Investors, the country’s interbank market watchdog better known as NAFMII, has halted registration of new credit-linked notes, a derivatives product, that use offshore LGFV debt as underlying assets. While the NAFMII earlier this month told some brokerages who are major issuers of CLNs that the suspension is temporary, it didn’t indicate when it may be lifted.

Even in 2016, the truth about China's real-estate market was obvious to anyone who knew what to look for: The boom had turned into a bubble—and was likely to end very badly, the Wall Street Journal reported. The bubble proceeded to get even worse, though, because no one wanted the music to stop. Chinese developers, home buyers, real-estate agents and even the Wall Street banks that helped underwrite the boom all ignored warning signs. Developers found ways to obscure the amount of debt they were holding, with the help of bankers and lawyers.

China’s central bank has again reiterated its cautious approach to monetary easing, reinforcing views that it’s unlikely to deliver a big liquidity boost via bond trading, the Wall Street Journal reported. Officials from the People’s Bank of China told the state-run Financial News that the central bank will stick to normal monetary policy tools, but broke weeks of silence about treasury bond trading, a policy tool it has used sparingly in the past two decades.