A key Hong Kong Stock Exchange index removed six Chinese property developers, including Evergrande’s property management unit, which either requested debt payment extensions or defaulted and did not release results 2021 financials.
Evergrande, Sunac, Kaisa Group, China Aoyuan and Shimao Group were removed from the Hang Seng composite index last week, according to Chinese news outlet Caixin Global. The index, which measures 95% of the value of all Hong Kong-listed companies, made the decision after their shares were suspended from trading.
Chinese developers have been struggling since 2020, when regulators implemented deleveraging measures. Shimao, one of China’s biggest developers, recently defaulted on payment of a $1 billion bond after failing to pay interest and principal.
According to data from Dealogic, about 60 Chinese developers have more than $13 billion in debt maturing before the end of the year. Struggling companies are expected to seek extensions of that debt, though investors are reluctant to refinance or pump more money into the property market.
“Banks will continue to be selective about funding developers through loans, bonds and asset management products, while investors are likely to remain cautious about investing in developers,” Moody’s said. in a report cited by Caixin.
None of the six have projects in the United States, where Chinese developers have faced financial difficulties in recent months. Oceanwide, once the owner of properties and land from coast to coast, recently lost control of its Manhattan development site after failing to repay $165 million of a $175 million loan from DW Partners. , based in Midtown. The company planned to build a 1,500-foot skyscraper on the land.
Pacific Park co-developer’s Chinese parent company Greenland USA was downgraded last month by S&P Global Ratings, which said it was at risk of defaulting on debt.