China Aoyuan was downgraded to CCC from B by S&P on reasons of liquidity crunch. S&P believes Aoyuan needs external capital to repay $500mn of its bonds due January 2022 with the company also having another $188mn in 364-day notes due around the same time. S&P expects its cash to be more restricted than its previous assessment although Aoyuan notes that 60% is at the Holdco level. Recent asset disposals and other likely near term project disposals are unlikely to cover the above dues. Its slowing sales momentum will further weaken its cash inflow and the rating agency expects Aoyuan’s contracted sales to fall by 3-5% in 2021 and 2022.

Aoyuan’s dollar bonds are lower with its 5.98% 2025s down 5.6 points to 28.2 cents on the dollar.

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Kaisa Group was downgraded to C from CCC- by Fitch reflecting the likelihood that Kaisa missed the coupons on its senior notes and entered the consequent 30-day grace period. There has been no information about Kaisa or the trustee paying its $58.8mn coupon on November 11 for its $1bn 11.7% 2025s or the $29.9mn coupon on November 12 for its $500mn 11.95% 2023s. Kaisa announced on November 9 that Kaisa Group (Shenzhen) Co., an onshore subsidiary, provided a guarantee to Shenzhen Jinheng Wealth Management Co., another onshore entity that has issued wealth-management products but did not redeem the products when they were due in early November. Kaisa is still exploring measures to address the issue.

Kaisa’s dollar bonds are trading mixed with its 10.5% 2025s up 0.75 to 34 cents on the dollar while its 10.875% Perps are down 0.2 to 27.5 cents on the dollar.

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