(Bloomberg). — Chinese high yield dollar bonds dropped as concerns about Zhenro Properties Group Ltd.’s financial health weigh on the market. 

It stated in an exchange filing that the developer wants to increase its maturity of $1 billion worth of debt this year, citing a lack of capital. Worries about Zhenro may undermine the government’s efforts to stem financial contagion in the sector and further drive up financing costs for property firms that need to repay almost $100 billion of debt this year.

Zhenro is at the forefront of pressure on China’s wider market. Tech stocks fell for the third straight day, amid concerns that the government will crack down further. There’s still room for China to cut interest rates and the bank reserve requirement ratio, the China Securities Journal reported.

The Key Developments

• Zhenro Wants More Time To Pay $1 Billion In Bonds This Year
• Tencent Talks of a New Crackdown, Tech Wipeout Deepens
• Chinese Developer Fantasia’s Directors Sued by Bondholder
• China Homes Prices Fall In Sign Of Hope For Builders 
• China’s Latest Default Warning Takes Shock Factor to Extreme
• Hedge Funds That Won Big in China’s Bond Meltdown Now See Risks

China’s High Yield Dollar Bonds fall as Developer Worries persist (10:05 HK).

Credit traders reported that Chinese high-yield dollars bonds dropped 0.5 cents to one cent on Tuesday morning. Shimao Group Holdings Ltd.’s 6.125% bond due 2024 was indicated down 0.6 cent on the dollar at 43 cents, Bloomberg-compiled prices show as of 9:54 a.m. in Hong Kong.

Zhenro’s 5.98% dollar note due April was indicated slightly lower on Tuesday morning at 19.6 cents on the dollar, according to Bloomberg-compiled data. 

China Tells Banks, SOEs to Report Exposure to Jack Ma’s Ant (9:26 a.m. HK)

Chinese authorities told the nation’s biggest state-owned firms and banks to start a fresh round of checks on their financial exposure and other links to Ant Group Co., renewing scrutiny of billionaire Jack Ma’s financial empire, according to people familiar with the matter.

Numerous regulators including the bank watchdog ordered institutions that fall under their supervision to examine any exposure to Ant and its subsidiaries, as well as its shareholders, up until January. The people asked not to be identified because the matter is confidential. 

Yango Group Bondholders will Meet Following Dollar Bonds Failure (9:12am HK).

Holders of Yango Group’s 6.92% yuan bond due 2025 will hold a meeting on Feb. 28 after two dollar bonds default triggered cross-protection clauses, according to a statement on Chinamoney.com.cn. 

Zhenro Developer Proposes Maturity Extension Through Bond Swap (6.20 a.m. Hong Kong)

Zhenro proposes a maturity extension for five-dollar and yuan notes due 2022 to make way for new bonds. These bonds would mature in March 2023, and pay interest at 8% annually. The developer said that if it can’t complete its exchange offer and consent solicitation, it may not be able to repay some of the debt and meet its financial commitments. 

This proposal is coming days after Zhenro requested bondholders to waive default claims that could arise from Zhenro’s failed redemption on March 5 of the $200 million perpetual note. That prompted Fitch Ratings to cut Zhenro’s long-term debt rating to C from B, saying the request amounted to a “distressed debt exchange.” Moody’s Investors Service followed suit. 

China May Reduce Interest Rate and Reserve Ratio. Journal (06:51 a.m. HK

China has the ability to reduce interest rates, and the ratio of bank reserve requirements, though the urgency for monetary ease is decreasing following the January credit surge, China Securities Journal reports in front-page reporting, citing analysts.

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