China’s Modern Land Misses Bond Payment, Property Shares Drop

8 months ago 117

HONG KONG/SHANGHAI—Modern Land missed a enslaved payment, the latest Chinese spot developer to bash so, adding to worries astir the wider interaction of the debt crisis astatine behemoth China Evergrande Group, and dragging connected shares successful the sector.

Modern Land (China) Co., Ltd. said successful a filing that it had not repaid main and involvement connected its 12.85 percent elder notes that matured connected Monday owed to “unexpected liquidity issues.” The enslaved has an outstanding main of $250 million.

Separately, China’s authorities planner said it and the overseas speech regulator met with companies successful “key sectors,” which a root said included spot firms, implicit their overseas indebtedness holdings, asking them to “optimize” offshore indebtedness structures and hole to repay involvement and main connected overseas bonds.

Modern Land’s missed outgo comes days aft the company, a smaller developer, scrapped plans to question capitalist consent to widen the maturity day of its enslaved by 3 months, saying doing truthful was not successful the champion interests of it and its stakeholders.

Rating bureau Fitch earlier this period chopped Modern Land’s standing to “C” from “B” implicit the consent solicitation to alteration enslaved terms, saying it considered the determination a distressed indebtedness exchange. Tuesday’s missed outgo prompted ratings downgrades by Fitch and Moody’s.

Developers are defaulting “one by one,” said an capitalist with vulnerability to Chinese high-yield debt, who asked not to beryllium identified arsenic helium is not authorized to talk to media.

“The question is always, who’s next?”

Regulators Weigh In

After weeks of near-silence arsenic capitalist worries implicit Evergrande and different developers mounted, Chinese regulators including the cardinal slope person go progressively vocal.

Late connected Tuesday, China’s National Development and Reform Commission said that it and the State Administration for Foreign Exchange had met with overseas indebtedness issuers, telling them to usage funds for approved purposes and “jointly support their ain reputations and the wide bid of the market.”

This month, Fantasia Holdings Group defaulted connected a maturing dollar enslaved that heightened concerns successful planetary indebtedness markets, already roiled by worries implicit whether Evergrande would conscionable its obligations.

Evergrande, which narrowly averted a costly default last week, is reeling nether much than $300 cardinal successful liabilities and has a large outgo deadline connected Friday.

Shares of spot developers extended the losses, wounded besides by interest implicit China’s plans to introduce a existent property tax.

China’s CSI 300 Real Estate Index fell 2.8 percent, and the Hang Seng Mainland Properties Index dropped 4.3 percent. The broader Hang Seng scale edged down 0.4 percent portion China’s CSI300 scale slipped 0.3 percent.

The imaginable of contagion and much defaults person weighed connected the assemblage successful a large setback for investors.

Chinese Estates Holdings Ltd. said it would publication a nonaccomplishment of $2.24 cardinal this fiscal twelvemonth from its latest merchantability of bonds issued by Chinese spot developer Kaisa Group Holdings Ltd.

Modern Land’s 11.8 percent February 2022 enslaved was down 1.6 percent astatine a discount of implicit 80 percent from its look value, yielding astir 1,183 percent, according to information supplier Duration Finance.

China Evergrande shares ended the time down much than 4 percent. Shares successful its electrical conveyance (EV) portion closed down 6.75 percent aft earlier rising arsenic overmuch arsenic 5.8 percent, aft the developer said it would prioritize the maturation of its EV business.

(This communicative corrects fig successful paragraph 11 to $300 cardinal not $300 million)

By Donny Kwok and Andrew Galbraith