China developer Shimao Group’s shares, bonds plunge after missed loan payment

A man walks in front of a wall bearing the Shimao Group logo, apartment buildings and Pudong Financial District appear in the background, in Shanghai, China, January 1, 2013. REUTERS/Stringer

HONG KONG/SHANGHAI (Reuters) – Shares of Chinese real estate developer Shimao Group Holdings fell on Friday and some of its main unit bonds were temporarily suspended from trading after the company defaulted on a credit loan, underscoring continued pressure in China’s real estate sector.

Shares of Hong Kong’s Shimao (0813.HK) fell more than 18% after opening trading on Friday, while three exchange-traded Shanghai bonds issued by its unit Shanghai Shimao Co (600823.SS) fell more than 20%, halting Trading temporarily above what the Shanghai Stock Exchange said was “abnormal volatility”.

Exchange data showed an additional three Shanghai Shimao bonds fell between 13% and 14%. The six bonds were last priced at distressed levels between 40%-60% of their face value.

The declines come after China Credit Trust Co. said Thursday that Shimao Group had defaulted on a loan after defaulting on 645 million yuan ($101.10 million). Read more

On Friday, another unit of Shimao, Shanghai Shimao Construction, said in a filing that it was in talks with the China Credit Trust to resolve outstanding payments, and that the missed payment would not speed up requests for repayment in the open bond market.

(1 dollar = 6.3797 yuan)

Additional reporting by Claire Jim in Hong Kong and Andrew Galbraith in Shanghai; Editing by Christian Schmolinger and Edwina Gibbs

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