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Longfor Group’s dollar bonds jumped higher by 1-2 points after the developer’s unit priced a local bond, thereby raising funds. Its unit, Chongqing Longhu Development priced an RMB 1.1bn ($150mn) 3Y note guaranteed by state-backed China Bond Insurance at 3.5%, as per sources. This is the unit’s third state-backed issuance under the government’s program for developers to have the state-backed insurer guarantee their local bonds. The news about the fundraise comes a day after the parent, Longfor Group was downgraded to Baa3 by Moody’s, albeit still remaining as an IG-rated developer. Its 3.95% 2029s were up 2.2 points to 57.31, yielding 14.93%.
Separately, Country Garden reported a loss of $6.7bn in 1H 2023 along expected lines and warned of a possible default. It cited “material uncertainties” and “significant doubt on the group’s ability to continue as a going concern”. Regarding its dollar bonds, the developer is approaching the end of grace periods on two of its notes, with a combined $22.5mn in coupons due in the first week of September. Its dollar bonds are priced-in for a default, trading at deeply distressed levels of ~7 cents on the dollar.