Shimao Group Holdings Ltd’s (世茂集團) bonds tumbled to new lows after the developer’s attempts to revive confidence in its finances failed to reassure investors.
Shimao Group’s bond due next year plunged by more than US$0.07 on the dollar, despite reassurances from its Shanghai Shimao Co (上海世茂) unit late on Tuesday that its business activities are normal, and that there is no event that would affect its ability to repay its bond principal and interest.
The parent company also defended a transaction between two units that had prompted the Shanghai Stock Exchange to ask whether the deal would hurt smaller shareholders.
This week’s sudden sell-off in Shimao Group’s bonds and shares has unnerved the broader market because the developer was considered to be among the industry’s stronger players.
Shimao Group has blamed the sell-off on unspecified “rumors,” but its sparse public comments have added to concerns that it faces a cash crunch.
The company is discussing a maturity extension for some investment products issued by Guotong Trust Co (國通信託), the 21st Century Business Herald reported.
Due next year, Shimao Group’s note fell US$0.074 on the dollar to US$0.565 yesterday, after tumbling US$0.158 a day earlier, Bloomberg-compiled prices showed. Its stock tumbled as much as 5.1 percent before trading 3.2 percent lower as of 10:16am in Hong Kong.
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