Chinese developer Jiayuan and subsidiary’s shares suspended after stock pledge to SHK Finance, Moody’s rating downgrade
- Shares of Jiayuan International Group and its property management arm Jiayuan Services Holdings plunged before a trading suspension was put in place
- The stock crash came after a company owned by chairman Shum Tin Ching pledged shares in Jiayuan International and Jiayuan Services to SHK Finance a day after Moody’s downgraded their rating
The crash came after Mingyuan Group Investment, majority owned by Jiayuan International’s chairman Shum Tin Ching, pledged 1.04 billion shares of the developer and 450 million shares of Jiayuan Services to SHK Finance on May 11, filings to the Hong Kong stock exchange showed on Wednesday.
However, a day earlier, Moody’s had downgraded Jiayuan International’s corporate family rating to B3 from B2 and changed the outlook to negative.
“The downgrade reflects Jiayuan’s increasing refinancing risk, driven by its weakening liquidity and material amount of offshore bonds maturing in the next 12-18 months,” said Kelly Chen, vice-president and senior analyst at Moody’s. “The negative outlook reflects the uncertainties over Jiayuan’s ability to raise new funding to manage the company’s refinancing needs.”
Jiayuan International and Jiayuan Services were not available for comment.
Jiayuan International, the co-developer of the micro-home T-Plus project in Tuen Mun, sank 41.4 per cent to HK$0.58, while Jiayuan Services slumped 70.6 per cent to HK$0.67 before the two companies requested a trading suspension at 10.30am.
