(Bloomberg) -- China Evergrande Group rose the most in more than three months after the developer said it plans to redeem a $2 billion convertible bond early, passing a liquidity test as it looks to substantially cut debt.The residential builder said it will redeem the remaining principal of HK$16.1 billion ($2.1 billion) in advance on Feb. 10, according to a filing Monday. The company will tap internal funds of HK$16.5 billion to pay the principal and interest, and the bond will be canceled.Evergrande shares jumped as much as 17% in Hong Kong to HK$17.50, the biggest gain since Sept. 30. Rival developers including Sunac China Holdings Ltd. also surged in Hong Kong after data on Monday showed the nation’s residential sales reached a record last year.The company’s 8.75% dollar bond due 2025 rose 1.3 cents on the dollar to 82.1 cents as of 2 p.m. in Hong Kong, according to prices compiled by Bloomberg.“For bond investors, it would be another milestone on debt reduction on top of recent efforts,” said Daniel Fan, a credit analyst at Bloomberg Intelligence. “It’s a show of strength especially when investors were still concerned about default risk three months ago.”Read more: Evergrande Will Find Out How Good Its Friends Are: Shuli RenThe developer, saddled with a debt pile of almost $120 billion last year, said the early repayment shows its cash strength, and reiterated its pledge to cut debt by 150 billion yuan ($23 billion) this year. China developers are under increased pressure to lower debt under new requirements imposed by China’s regulator known as the “three red lines.” Evergrande’s latest financial figures suggest it breached all three debt metrics under the new rules.Evergrande sold the five-year HK$18 billion convertible bond in 2018, allowing holders to convert their notes to equity by Feb. 14 at HK$33.24 apiece. The share price has been trading at less than half that recently. The 4.25% convertible bond maturing in 2023 traded close to par at 98.694 cents Monday.(Updates with security prices throughout)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.