Shimao downgraded by Fitch, Moodys

[WASHINGTON] Two credit rating agencies downgraded Shimao Group Holdings on Friday, highlighting the growing stress at the embattled Chinese property developer.

Shimao Group lost its investment-grade status at Fitch Ratings, which lowered its assessment of the firm for the first time since 2012, citing weak sales and "unfavorable" financing conditions.

Moody's Investors Service cut Shimao Group deeper into junk on increased refinancing risks.

Record plunges in Shimao Group's shares and bonds this week have triggered concern that contagion is spreading from junk-rated rivals including China Evergrande Group and Kaisa Group Holdings.

Its higher rating meant many of Shimao Group's bonds are held by investors who have much lower tolerance for defaults than those who dabble in firms like Evergrande.

Shimao Group's bonds pared earlier gains triggered by signs authorities were working to ease its cash crunch, while its shares closed 4.9 per cent lower. China's financial regulator is coordinating negotiations between Shimao Group and some trust firms for loan extensions, according to people familiar with the matter.

BLOOMBERG