Chinese developer Shimao’s bonds jump on regulatory balm reports

SHANGHAI, Dec.16 (Reuters) – Bonds issued by a subsidiary of Chinese group Shimao Holdings (0813.HK) – recently rocked by concerns about the developer’s financial health – jumped 12% in Shanghai on Thursday, after media reports Locals reported that city regulators have offered to help the struggling industry.

A Shanghai Shimao Co Ltd bond (600823.SS) maturing in January 2022 rose 11.7%, making it the first winner in the Shanghai Stock Exchange corporate bond market on Thursday. It is still trading at 73.5 yuan, against a face value of 100 yuan, as the market price on default.

Most of Shimao’s other Shanghai bonds also rose sharply, while shares of the Shimao Group rebounded more than 6% in morning trading in Hong Kong.

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Shanghai regulators, including local branches of the People’s Bank of China and the China Banking and Insurance Regulatory Commission, held meetings with some real estate companies on Wednesday and December 9, local media reported, including the 21st Century Business Herald.

At the meeting, regulators urged developers to meet their repayment obligations, while offering to help meet developers’ rational financing needs to help companies manage their struggles, according to the reports.

Chinese developers came under tremendous pressure over the course of the year, with many grappling with cash crunch as Beijing pursued a relentless regulatory quest to reduce leverage in the heavily indebted sector.

Shares and bonds of the Shimao group have been recently disrupted by signs of strain on liquidity. Read more

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Report from the Shanghai press room; Editing by Christopher Cushing and Shri Navaratnam

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