US Investment bank JPMorgan cut its price target for the debt-ridden property developer China Evergrande from $0.93 to $0.36 on Friday, with the expectation that there was likely to be more negative news about the companies finances, reports Reuters. The bank also changed its recommendation to underweight from overweight.
Evergrande, which has around $20 billion worth of international bonds and a total outstanding debt of around $300 billion, has seen its share price slump 85% over the last year and rating agencies have issued a flurry of warnings over the last couple of weeks that it could default.
“We believe the company will continue to see negative news flows on its liquidity risk (refinancing/lawsuits from suppliers/potential bond defaults),” JPMorgan said. “While we think Evergrande will likely see a soft landing scenario, we think rerating will be unlikely in near future, until we have better clarity of an actual resolution.”