According to Bloomberg, Shimao’s dollar notes declined Thursday as the Chinese property developer’s failure to make some trust payments, and its credit rating downgraded.
Shimao’s 4.75% notes due on July 3 lost 8.3 cents on the dollar to 56 cents.
Last week, Shimao Group failed to negotiate an agreement to extend repayments on high-yield products worth around 6 billion yuan (948 million dollars).
The company’s debt crisis did not seem to be over when Reuters reported that Shimao Group might not redeem 1.1 billion yuan (174 million dollars) in asset-backed notes due to mature next month.
On Tuesday, Yunnan International Trust Co stated that it would host a meeting with investors to vote on an unspecified schedule for the notes on March 17. The trust firm revealed that Shimao’s asset-backed notes had generated less income than planned.
Moody downgraded Shimao’s corporate family rating (CFR) to Caa1 from B2 and revised Shimao’s outlook from under review to negative on Wednesday.
According to Celine Yang, a Moody’s Vice President and Senior Analyst, the reduction of Shimao’s CFR by two levels reflects “heightened liquidity risks over the next 6-12 months given the company’s slower-than-expected fundraising progress to address its large upcoming debt maturities.”
She added the negative outlook highlights “Shimao’s weak debt-repayment ability over the same period.”
Last month, Shimao defaulted on a trust loan. The company has tried to extend debt maturities, including asset-backed securities and trust loans with creditors.