China Evergrande's major unit stops buying and selling bonds, shares plummet

© Reuters

From Gina Lee – China Evergrande The group's (HK 🙂 shares plunged nearly 10% on Thursday after its main unit, Hengda Real Estate Group Co. Ltd.

China Evergrande's shares fell 9.61% to HK $ 2.54 ($ 0.32) by 12:30 p.m. ET (4:30 a.m. GMT).

Hengda’s motion comes after rating agency China Chengxin International announced on September 15 that the bonds were downgraded from AA to A according to a stock exchange filing. Both the bond rating and the issuer rating have been put on a watch list for further downgrades, it said.

The motion also comes because both the Shanghai and Shenzhen stock exchanges have repeatedly suspended trading in the bonds in recent days due to volatile trading.

The unit has also requested to suspend trading of its onshore corporate bonds for a day. The bond, traded on the Shanghai and Shenzhen stock exchanges, will only change hands through negotiated transactions once trading resumes on September 17th.

The trading mechanism changes were likely aimed at limiting participation and curbing volatility, a bond trader who refused to be identified told Reuters.

"Many companies would adjust the trading mechanism of their bonds before default," he said.

The company's bond, traded in Shenzhen in January 2023, last traded at CNY 24.99 on Wednesday, and the bond traded in Shanghai in May 2023 was traded at CNY 30.

China Evergrandes 8.75% dollar bond dated June 2025 traded at 29.375 cents Thursday morning, up about 4 cents from Wednesday's low, according to Duration Finance.

China Evergrande continues its efforts to avert a debt crisis, vacillating between a chaotic meltdown, a managed collapse, or the most unlikely prospect of a government bailout.

There are also growing concerns that the property developer’s liquidity crisis could impact other Chinese high yield issuers. An index for Chinese high yield bonds denominated in dollars fell earlier in the day to 374,646, its lowest level since April 14, 2020.

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