Default looms larger for Evergrande

Hong Kong United Times丨香港聯合時報

The main unit of China Evergrande Group (3333), Hengda Real Estate Group, applied yesterday to suspend trading of its onshore corporate bonds while rating agency S&P said it is almost certain that the developer will default.

Hengda received notice on September 15 from rating agency China Chengxin International that the bonds’ ratings had been downgraded to A from AA, and that the bonds rating and its issuer rating were put on a watch list for further downgrades, it said in a stock exchange filing.

Trading suspensions are relatively common in China’s domestic debt market following credit rating downgrades because a score below AA requires bonds to be traded via bid-ask and block platforms, rather than auctions. That prevents smaller investors, some of whom already can’t buy Evergrande’s local notes, from making speculative investments.

S&P this week further downgraded Evergrande to “CC” from “CCC,” with a negative outlook, citing reduced liquidity…

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