August 29, 2017 / 3:17 AM / a year ago

UPDATE 1-China Evergrande shares surge after debt cut pledge

* Aims to cut net debt ratio to 70 pct by 2020 from 240 pct

* Shares gain as much as 7 pct, outperforming benchmark index

* Evergrande doesn’t have deleveraging track record -S&P (Adds analyst comment, share details)

HONG KONG, Aug 29 (Reuters) - China Evergrande Group saw its share price gain as much as 7 percent in early Tuesday trade after the country’s third-biggest property developer by sales pledged to slash debt by 2020.

Evergrande has the second-largest corporate debt in China and the highest net debt ratio among Chinese developers. Late on Monday, it said it aimed to cut the ratio to 70 percent by the end of the decade from 240 percent at the end of June.

Its share price has surged almost 400 percent this year in response to a widely expected backdoor listing of its real estate assets in China, fresh capital of 70 billion yuan ($10.59 billion) from strategic investors, and share buybacks.

At 0300 GMT, the share price was up 2.4 percent versus a 0.4 percent fall in the Hang Seng Index.

Many analysts upgraded their buy recommendations on Evergrande stock earlier this year following the strategic investments and as it progressed in a plan to fully redeem perpetual bonds.

“The company has been very aggressive in the past and it does not have a lot of track record in deleveraging,” said S&P Global Ratings analyst Matthew Chow. “To us, track record is also important, and we will monitor the company’s progress in that regard.”

$1 = 6.6085 Chinese yuan renminbi Reporting by Anne Marie Roantree, Clare Jim and Umesh Desai; Editing by Clarence Fernandez and Christopher Cushing

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