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    Shimao jumps to reports that it sells all real estate projects

    Shimao Group Holdings Ltd in Shanghai, China on Saturday, January 8, 2022. Pedestrians near the Riviera Garden residential area developed by.

    Qilai Shen | Bloomberg | Getty Images

    Share Shimao China’s business publication Caixin surged nearly 7% on Monday after a perplexed developer reported selling all real estate projects for both residential and commercial use.

    As debt concerns grow within China’s real estate sector, developers such as Evergrande are trying to sell their assets in recent months to mitigate the cash crisis.

    Shimao will be the latest to follow. Since then, stock prices have slowed down, but still traded more than 2% higher.

    The rally marked a turnaround from the Friday session It plummeted by nearly 17% After Reuters reports that the full repayment of the trust loan has failed.

    In a note on Monday, rating giant S & P Global said default risk in China’s real estate sector is likely to escalate in the first quarter of this year, especially if policies do not provide “meaningful mitigation.” ..

    “A significant number of Chinese developers are still facing downward pressure and are tackling tight liquidity,” said Ricky Tsang, credit analyst at S & P Global Ratings.

    The agency said pre-sales funding oversight remains “very tight.” This means that developers need to hold most of the cash from real estate presales, limiting the funds available to repay debt maturities.

    Read more about China from CNBC Pro

    China’s huge real estate industry has been under pressure as Beijing has sought to reduce its developer’s reliance on debt over the past two years. That caused Evergrande’s debt problem. This emerged later last year as the world’s most debt-ridden developers eventually defaulted.

    Those issues have spread to other developers as well. More and more people are facing cash flow issues and aren’t paying their debts — Not even relatively healthy developers like Shimao are spared..

    S & P said the total amount of bonds in the sector due this year is huge and will be paid $ 40 billion in the first half of 2022. Of that, 54% represent offshore debt.

    Tsang also has multiple developers Payment obligations around the upcoming Chinese New Year, This further complicates cash management.

    According to S & P, payments to construction companies and suppliers before the Lunar New Year holidays in early February are likely to be prioritized, and authorities are emphasizing the importance of respecting delivery to buyers.

    Shimao jumps to reports that it sells all real estate projects

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    The post Shimao jumps to reports that it sells all real estate projects appeared first on Eminetra.

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