Trading of Evergrande’s Bond Suspended After Credit Rating Downgraded

Market sentiment has largely been effected with expectation of spillover to the entire property sector

Hengda Real Estate Group Co Ltd – main unit of Evergrande Group suspended trading of its onshore bonds after credit rating of its bond was downgraded from A to AA. However, the company informed trading will resume on Friday again.

Evergrande has debt of more than two trillion yuan ($305 billion) and under tremendous pressure with concerns of being unable to raise additional funds to pay back to its lenders. Goldman Sachs commented this could trigger a spillover effect on the entire property sector in China.

Earlier the company notified major Chinese banks, it will not be able to pay interest payments due on September 23 as reported by Bloomberg. The company hired advisers for debt restructuring which would be the country’s largest debt restructuring.

Evergrande’s stock listed in Hang Seng Index fell to HK $2.63 down by 6.41%. The sentiment is felt across major Asian indices with benchmark index CSI 300 down by 53.62 points at 4807.70 points, the lowest since July.

The Hang Seng Index is down by 1.46% dropping as much as 365.36 index points as property stocks dropped on a roll with market’s assumption of spillover effect on other property developers.

The USD/CNY gained as much as 0.21 % trading at 6.446.

However, several market experts believe Beijing will intervene in order to protect overall sentiment in the housing market preventing it from collapsing.

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