Evergrande Stock Is Suspended in Hong Kong, Pending Announcement

Evergrande Group was suspended in Hong Kong on Monday. Additionally, Evergrande onshore bonds were suspended as well as Evergrande Property Services Group Ltd and Evergrande New Energy Vehicle Group Ltd.

source: evergrande.com

An announcement by the company may be made later today. Evergrande has been struggling for some time, missing payments over its bonds since September.

Evergrande stock was beaten by the market for some time.

source: Evergrande stock suspended, tradingview

On Sunday it was revealed that Evergrande Group will see its stake in Nanjing property. Evergrande's liabilities are estimated to be $310 billion. A restructuring plan was revealed earlier this year. Based on the suspension of its stocks, matters may have deteriorated.

Credit Rating Agencies Slash Ratings

Despite China's stimulus and efforts to calm investors on Wednesday, credit rating agencies took action against Sunac and Logan Group.

Sunac was downgraded last week by S&P credit rating agency. Logan Group, a well-known real estate investment company in China has been downgraded by Moody's credit rating agency to Caa2.

"Logan has large debt maturities coming due or puttable by the end of 2022 at the holding company level, including RMB9.8 billion of onshore (including puttable) and USD300 million of offshore bonds.

"Moody's estimates that the company will still face a liquidity gap considering its sizable debt maturity, despite its asset disposal plan for its debt repayment.

"Moody's expects a significant part of Logan's cash to be held at the project level to be used for project-level debt repayment and construction expenses.

"As a result, Logan will not have sufficient cash at the holding company level to service its maturing debt, absent any new fundraising activities amid the tight funding environment and weak investor confidence.

"The risk of default or debt restructuring has increased. Moody's forecasts that Logan's contracted sales will decline significantly over the next 6-12 months, driven by weak homebuyer confidence and diminishing saleable resources.

"This will weaken its operating cash flow, and in turn, its liquidity. Logan's operating scale will shrink if further asset disposals occur.

"Logan's contracted sales fell 44% and 65% in January 2022 and February 2022, respectively, from the same periods a year ago. These levels of sales decline are weaker than the industry average."

source: Moody's

The PBOC May Slash Rates

Aside from Logan Paul, Ronshine China Holdings Ltd.'s auditor has resigned. The stock took a deep dive lower as the company will be unable to release its audited 2021 results by 31 March 2022.

source: Ronshine China Holdings Stock, tradingview

There are growing expectations for the People's Bank of China (PBOC) to slash rates in April. The reserve requirements ratio may be cut as well.

It is still early to determine whether the chaos in China's real estate market will spillover to other markets. If the PBOC will loosen its monetary policy, it may then begin reflecting in other markets.