Modern Land (1107.HK) missed a bond payment, the latest Chinese real estate developer to do so, adding to concerns over the wider impact of the debt crisis of giant China Evergrande Group (3333.HK) , and lagging behind on sector stocks.
The Chinese state planner was due to meet with real estate companies carrying large dollar-denominated debt on Tuesday to take stock of their total issuance volume and repayment capacity, amid growing concerns over liquidity.
Modern Land (China) Co Ltd said in a filing that it had failed to repay principal and interest on its 12.85% senior bonds which matured on Monday due to “unexpected liquidity issues.”
The missed payment comes days after the company, a small developer, abandoned its plan to seek investor consent to extend its bond due date by three months, saying it was not in the best interest. for it and its stakeholders. Read more
Earlier this month, the rating agency Fitch downgraded Modern Land’s rating from “B” to “C” following the request for consent to change the terms of the bonds, saying it was considering the move. like a troubled debt swap.
The developers are defaulting “one by one,” said an investor exposed to Chinese high-yield debt, who asked not to be identified because he is not authorized to speak to the media.
“The question is always, who’s next?”
This month, Fantasia Holdings Group (1777.HK) defaulted on a maturing dollar bond, heightening concerns in international debt markets, already troubled by concerns over whether Evergrande would honor. its obligations.
Evergrande, which narrowly avoided a costly default last week, has liabilities of more than $ 300 million and has a significant payment deadline on Friday. Read more
The actions of real estate developers have extended their losses, also penalized by concerns over China’s plans to introduce a property tax.
The Chinese CSI 300 Real Estate Index (.CSI000952) fell 2.8% and the Hang Seng Mainland Properties Index (.HSMPI) fell 4.3%. The larger Hang Seng index (.HSI) edged down 0.4% while the Chinese CSI300 index (.CSI300) slipped 0.3%.
The prospect of contagion and other defaults weighed on the industry, causing a major setback for investors.
Chinese Estates Holdings Ltd (0127.HK) announced that it will recognize a loss of HK $ 288.37 million ($ 2.24 billion) in the year due to its latest sale of bonds issued by Chinese real estate developer Kaisa Group Holdings Ltd (1638.HK).
Modern Land’s February 2022 11.8% bond fell 1.6% at a discount of more than 80% from face value, yielding around 1.183%, according to data provider Duration Finance.
China Evergrande stock ended the day down more than 4%. Shares in its electric vehicle (EV) unit (0708.HK) closed down 6.75% after rising to 5.8% previously, after the developer said it would prioritize growth in its electric vehicle business.
Reporting by Donny Kwok in Hong Kong and Andrew Galbraith in Shanghai; Written by Anne Marie Roantree; Editing by Himani Sarkar, Robert Birsel
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