BEIJING: China’s local bonds joined a dramatic selloff in property debt that has roiled the offshore market this week.

       Trading was halted in two yuan bonds after they plunged more than 20%.

       Kaisa Group Holdings Ltd led declines in the nation’s offshore bonds, while Shimao Group Holdings Ltd’s 4.75% dollar bond due 2022 was poised for its biggest drop on record.

       China’s dollar high-yield debt fell for the 10th day in 11 after yields climbed above 21%.

       Contagion spreading to China’s US$12 trillion (RM49.84 trillion) domestic credit market would add pressure on policy makers to take action to avoid a cash crunch.

       So far stress has been most acute in the much smaller offshore bond market, where surging borrowing costs have made it all but impossible for developers to refinance debt at a time when the housing market is slowing.

       That’s spurred concern more companies will miss payments after at least four property firms defaulted last month.

       Developers have just over US$6.2bil (RM25.75bil) of onshore and dollar-bond payments due in November.

       China’s real estate sector makes up almost half of the world’s distressed dollar-denominated debt.

       Shanghai Shimao Co’s 3.6% yuan note due 2023 was halted after slumping 21%.

       Xiamen Yuzhou Grand Future Real Estate Development Co’s yuan bond due 2024 was suspended after sinking 22%.

       Both were poised for their biggest declines on record.

       Kaisa’s dollar notes fell as much five US cents (21 sen) on the dollar and its shares tumbled to a record low.

       The company is China’s third-largest dollar debt borrower among developers, with more than US$11bil (RM45.69bil) of dollar bonds outstanding.

       China Aoyuan Group Ltd shares plunged 8% after Fitch Ratings cut its rating on the company by two notches to B+, citing the company’s lack of funding access, “large” maturities and “high” leverage. — Bloomberg