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Jinke Smart Services halts trading ahead of M&A announcement

HONG KONG (Reuters) - Chinese property management firm Jinke Smart Services Group Co said on Monday its Hong Kong-listed shares were halted from trading pending an announcement related to mergers and acquisitions.

The trading halt followed reports last week that parent company Jinke Property Group - China’s 21st largest developer by sales - might not be able to refinance maturing onshore bonds and could extend repayments due later this week.

One of its onshore bonds was temporarily suspended from trading on Monday morning after dropping more than 20%, the Shenzhen stock exchange said.

On Friday, Chongqing-based Jinke Property said 45.2 million, or 0.85%, of shares worth 174 million yuan ($26.04 million) owned by its controlling shareholder and pledged to Citic Securities had been liquidated on May 18-19 due to default risk.

Shares of Jinke Property listed in Shenzhen slid more than 8% on Monday, after slumping 10% on Friday. Shares of Jinke Smart Services closed down 16% on Friday.

China’s highly-leveraged property developers have been struggling to meet bond payments, leading to some high profile defaults, amid Beijing’s crackdown on excessive borrowing in the sector and as home sales slow.

S&P Global Ratings said on Monday it withdrew the rating of Jinke Property at the developer’s request, after it downgraded the developer’s long-term issuer credit rating to ‘B-’ from ‘B+’ on Friday, and placed it on CreditWatch Negative.

The rating agency cited Jinke’s more-than-expected liquidity deterioration, due to cash trapped in escrow accounts and sluggish sales, as well as heightened refinancing risks, for the downgrade.

Purchase of Jinke Property’s onshore bonds were limited to only institutional investors from last Friday, according to a company filing last week, a move other indebted developers including China Evergrande Group had implemented before they faced repayment issues.

($1 = 6.6830 Chinese yuan)

Reporting by Clare Jim; Editing by Jacqueline Wong

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