Fitch downgraded yesterday Sinic’s IDR to ‘CCC’ on the lower likelihood of bond refinancing.
Fitch Sinic’s downgrade reflects the diminishing likelihood of Sinic refinancing its immediate maturity, a USD 246 million bond due on 18 October 2021
Fitch does not believe that Sinic can reduce land acquisitions for a prolonged period due to its high-churn business model.
Sinic Holdings one of the biggest Chinese real estate developers slumped 87% at 0.50 and trading halted in Hong Kong as fears of Evergrande contagion grow in the region. The stock hit the daily low at 0.37, on Friday Sinic stock closed at 3.85.
Investors fear that Sinic will follow Evergrande in a panic effect through the Chinese economy and around the globe. Evergrande is trading 15% lower in Hong Kong on fears that the company will fail to meet the financial obligations expiring this week.
Last Wednesday, Fitch Ratings cut the outlook on Sinic (2103) Long Term Issuer Default Rating to Negative from Stable with a “B+” rating. Sinic Holdings faces a 9.5% 246 million bond expiring on October 18. Reports indicate that the company is planning a pay cut up to 70% to its senior management staff.
Stocks around the globe are under heavy selling pressure, Hang Seng index ended 3.30% lower at 24099. In Australia, the ASX 200 had its worst trading session in the last seven months with a loss of over 2%.
European Stocks in Deep Red
European stock markets followed Asian indices as investors dump stocks. The DAX index as of writing is 2.12% lower at 15160 while the FTSE 100 in London is giving up 1.72% at 6857. In Wall Street, the futures are also lower. S&P500 futures trading 1.04% lower at 4379 and the Nasdaq futures are 0.84% lower at 15183.