Chinese Developer Wuzhou Plunges 85% in Hong Kong Trading

(Bloomberg) -- Shares of Chinese property developer Wuzhou International Holdings Ltd. plummeted in Hong Kong before trading was suspended.

The stock lost 85 percent prior to the halt, wiping out $243 million of value. The plunge comes a day after the company published a statement saying a media report -- alleging the company was involved in a commercial property project where funds were misappropriated -- was not correct.

Concern has been growing about Wuzhou International’s ability to repay debt, with $300 million of dollar-denominated bonds maturing in September.

The firm was late on a coupon due March 26 but made the payment in the end, Bloomberg reported in April, citing people familiar with the matter. Fitch Ratings Ltd. withdrew its ratings on the company last week, saying Wuzhou International chose to stop participating in the rating process, which left Fitch without sufficient information to maintain its ratings. Moody’s Investor Service gives the developer a Caa1 issuer rating, seven steps below investment grade.

“I would be surprised if they could issue," said Charles Macgregor, head of emerging markets at Lucror Analytics Pte. in Singapore, noting that the company’s rating profile will make it difficult for it to find investors even though it has unused quota from Chinese regulators to borrow offshore.

Wuzhou is looking into the share plunge and can’t immediately comment, said a spokesperson who declined to give their name. Lorraine Chan, a spokeswoman for Hong Kong Exchanges & Clearing Ltd., said the bourse operator does not comment on individual companies.

Wuzhou’s dollar bonds due in September, which are thinly traded, were little changed at 81 cents on the dollar, data compiled by Bloomberg show. Fitch said last week the company’s liquidity is insufficient to cover its short-term debt.

Refinancing avenues are narrowing for weaker companies amid a jump in funding costs. Hsin Chong Group Holdings Ltd., another Hong Kong-listed builder, defaulted on its U.S. dollar bonds this month. That comes as corporate defaults increase in China’s onshore bond market amid a government crackdown on leverage.

 

May 25, 2018, 08:05:12.683 GMT

By Jeanny Yu; Edited by Richard Frost and Sarah McDonald