Investors around the world are preparing themselves for a volatile week in China’s credit markets, as several payment deadlines approach for some of the property sector’s most troubled companies, reports Bloomberg. China Evergrande Group is seeking to avoid its first default on an onshore bond and Shimao Group Holdings—which was rated investment grade only two months ago—and one of its onshore units also need to service some $376 million in upcoming bond payments this week.
The credit crunch in China’s property sector drove defaults to a record last year, sending stress levels in the overseas credit market to the highest possible reading in Bloomberg’s China credit tracker in December. That’s likely to continue, as builders faced at least $197 billion in maturing bonds, coupons, trust products and deferred wages to millions of migrant workers at the start of the month.
Offshore bondholders are already feeling some pain this week after Guangzhou R&F Properties repurchased just 16% of outstanding notes in a tender and consent solicitation that Fitch Ratings labeled a “distressed exchange.” The firm initially said it expected to set aside $300 million for a deal, before announcing that it had “materially less.”