© Reuters. FILE PHOTO: A man walks past a wall carrying the logo of Shimao Group, with residential buildings and the financial district of Pudong seen in the background, in Shanghai, China January 1, 2013. REUTERS/Stringer
HONG KONG/SHANGHAI (Reuters) -Shares of Chinese developer Shimao Group Holdings slumped on Friday and trading of some its key unit’s bonds was paused after the company defaulted on a trust loan payment, underscoring continued stress in China’s property sector.
Shimao’s Hong Kong shares fell more than 18% after trading opened on Friday, while three Shanghai exchange-traded bonds issued by its unit Shanghai Shimao Co tumbled more than 20%, triggering trading pauses over what the Shanghai Stock Exchange said was “abnormal fluctuations”.
Three additional Shanghai Shimao bonds fell between 13% and 14%, exchange data showed. The six bonds were last quoted at distressed levels of 40%-60% off their face value.
The falls come after a trust company, China Credit Trust Co, said on Thursday that Shimao Group defaulted on a loan after missing a 645 million yuan ($101.10 million) payment.
On Friday, another Shimao unit, Shanghai Shimao Construction, said in a filing that it is in talks with China Credit Trust to resolve the outstanding payment, and that the missed payment will not accelerate payment requests in the open bond market.
($1 = 6.3797 yuan)
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