China Real Estate: Logan Group Notes Fall 5 Points on Asset Sale Report, Chinese Property Developers’ HY Bonds Drop After Lunar New Year Holidays Amid Weak January Contracted Sales Projections

This article was originally published to Reorg subscribers Monday, Feb. 7, 2022. 

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China real estate developers’ offshore high-yield bonds dropped several points this morning, Feb. 7, as markets in Asia returned fully from Lunar New Year holidays, with sources citing a weak overall global market, a climb in U.S. Treasury yields, and projected weak January contracted sales for the sector.

Logan Group’s offshore notes fell two to five points across the curve with the $300 million 4.5% due January 2028 notes indicated down to 67/68.5 from 71 on Friday following a news report from Chinese real estate news site Leju Caijing that the company is selling its property management arm, said two buysiders. A Logan spokesperson denied the transaction.

High beta names including Country Garden also dropped. CoGard’s $1 billion 8% due 2024 notes dropped 1.5 points to around 89/90.5, said two separate buysiders. Sources said CoGard’s lower-than-expected sales in third- and fourth-tier cities were particularly worrying to the market.

Many sources noted predictions of poor January contracted sales performances as playing a part in this morning’s selloff.

Media reports published by Caixin and Bloomberg, citing preliminary data from research firm China Real Estate Information Corp, showed January 2022 contracted sales of China’s top 100 developers declining 43% on average versus the monthly average for 2021.

China Evergrande Group saw its January contracted sales drop to RMB 2.95 billion ($465.8 million), which compares with average monthly sales of RMB 36 billion in 2021. Others, including Shimao Group, whose $872 million 3.45% due 2031 notes dropped one point to 41.5 this morning, and CoGard, also saw significant declines in their January sales, the reports showed.

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