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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