Advanced Theory & Practice of Bonds

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1-2 December 2021

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Sunac China Holdings’ dollar bonds dropped after a letter said that they requested help from a local government to ease pressure on sales. Bloomberg reports that investors are concerned that Sunac could become the latest Chinese developer to suffer a liquidity issue with the company asking Shaoxing authorities to offer “special policy support”. After local housing curbs prevented sales at one of Sunac’s projects, sources cite a draft letter saying that Sunac’s local subsidiary urged the local government to resume sales registrations which can help it collect ~RMB 4bn ($619 million) in revenues. Sunac said, “We have nearly 600 sold units pending online registration, which involves the release of about 1 billion yuan in mortgage loans” as per a letter seen by SCMP.

In a latest update, Sunac repurchased $33.6m of its 7.5% 2024s on the open market after the fall in its bonds, as per IFR. Sunac said in a statement that the above letter was only an internal draft and had not been sent to the local government, but was accidently leaked on a local social media group. It add that construction operations across the country were going normally. Sunac is rated Ba3/BB/BB (Moody’s/S&P/FItch)

Sunac’s 7.5% 2024s were down 5.3% to 84.42 and its 7.95% 2023s were down 4.6% 86.17.

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