The bank also cut its recommendation to underweight from overweight.
“We believe the company will continue to see negative news flows on its liquidity risk (refinancing / lawsuits from suppliers / potential bond defaults),” JPMorgan said.
“While we think Evergrande will likely see a soft landing scenario, we think rerating will be unlikely in near future, until we have better clarity of an actual resolution.”
Evergrande, which has around $20 billion worth of international bonds, has seen its share price slump 85% over the last year and rating agencies have issued a flurry of warnings over the last couple of weeks that it could default.
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(Reporting by Marc Jones, editing by Huw Jones)