(Bloomberg) — A unit of Shimao Group Holdings Ltd. at the center of a missed loan payment said the incident won’t trigger investor demands for accelerated repayment of its debt in public markets.

In a filing to the stock exchange, it stated that liquidity was a concern and would take measures to increase asset sales. It said hasn’t suffered any public-market debt default. 

Shimao’s shares tumbled 18% in Hong Kong in early Friday trading to the lowest since March 2009. The developer’s 4.65% bond due Jan. 15 fell 13%, on pace for its biggest decline in more than three weeks. 

As a warning sign, the Bloomberg Index of Total Returns on China High-Yield Dollar Bonds fell 1.9% Thursday. It was its highest level in more than two months. 

These are the Key Developments

• Shimao Unit Says Trust Matter Won’t Spur Early Bond Repayment
• China Developers’ M&A Loans to Be Excluded From Metrics: Cailian
• Shimao Notice of Default Harms Bonds and Stokes China Property Fear
• Shimao pledges 265m shares of Shanghai-listed Unit for Loans
• China is seen delaying property tax trials until market improves

Shimao Unit Reduces the Impact of Loan Miss (09:46 a.m. HK). 

A unit of Shimao Group said it hasn’t suffered any default in public markets, while its missed loan payment won’t trigger demands for accelerated repayment, according to an exchange filing. 

Company stated that it was facing liquidity problems and would take steps to accelerate asset sales. 

DaFa Properties Launches Swap Bond Offering (8:59 AM HK)

DaFa Properties Group Ltd. made an exchange offer for $166 million (or 90%) of its outstanding principal amount of the 9.95% 2022 Notes, it stated in an Exchange filing. According to the developer, it seeks consents from bondholders for proposed amendments and waivers. 

Bond swap new notes will become available on June 30, and they will have a coupon at 12.5%. This offer expires on January 12th at 4 pm London time

Aoyuan discusses Offshore Projects (08:45 a.m. HK).

China Aoyuan Group Ltd. has been reported by local media The Paper that it is currently in discussions to sell up to five off-shore projects, with an estimated total value of around 3 billion Yuan. 

Developers’ M&A Loans to Be Excluded From Metrics (7:52 a.m. HK)

Major developers’ loans for mergers and acquisitions won’t be included in China’s “three red lines” metrics on debt, local media Cailian reported, citing unidentified people familiar with the situation. 

Developers were informed by lenders that the adjustment is applicable for property M&A loans that they take on the debt of the target companies, the report said. 

Shimao Default Note Hammers Bonds (7:30 a.m. HK).

Shimao Group Holdings Ltd., a bellwether for financial contagion in China’s embattled property industry, suffered its biggest-ever bond rout on Thursday after a creditor said one of the developer’s units defaulted on a local loan.

China Credit Trust Co. sent investors notices claiming that Shimao failed to pay 645million yuan ($101million) out of the total 792million yuan due Dec. 25. According to the notice, the trust company demanded that the developer repay the loan early to avoid defaulting on installments.

Shimao Pledges Unit’s Shares for Loans (7:25 a.m. HK)

Shanghai Shimao Investment Management pledged 265,000,000 shares (or 7.06%) in Shanghai Shimao Co. with Ningbo Commerce Bank Co. Wednesday, to help fund operations. According to an exchange filing.

Shimao Investment has pledged to buy 560 million shares in Shanghai Shimao from two companies that Hui Wing Ma controls. That’s a 13.9% share of the company as of Thursday. 

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