Shares of China Evergrande Group jumped after the cash-strapped property developer said it is in talks to sell some of its prized assets
Shares of China Evergrande Group jumped Wednesday after the cash-strapped property developer said it is in talks to sell some of its prized assets.
The real estate conglomerate’s Hong Kong-listed shares rose more than 10%, building on gains from earlier in the week, which helped to lift the stock prices of other Chinese residential developers. Evergrande’s dollar bonds also traded higher Wednesday—though they remain at distressed levels—and its shares are down by more than half in the year-to-date period. One of the company’s bonds that pays a 10.5% coupon and comes due in 2024 was recently bid on at 46 cents on the dollar, up about 2 cents, according to Tradeweb data. That level still implies a high likelihood of default.
Evergrande, one of China’s largest developers and the country’s biggest junk bond issuer, said in a stock exchange filing after Tuesday’s market close that it is in discussions to sell some of its ownership in its electric vehicle business and a property management unit. Both companies are listed in Hong Kong and their shares also jumped on Wednesday.
The developer didn’t say how much of each business it plans to sell and when the talks with what it called “independent third-party investors” would be concluded. The group owns 75% of China Evergrande New Energy Vehicle Group Ltd. , which has a market capitalization of about $18 billion, and 60% of Evergrande Property Services Group Ltd. , whose market value is close to $11 billion.
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