- Modern Land cites liquidity problems for non-payment
- The CNDR will meet with real estate companies on Tuesday
- Hang Seng real estate index drops more than 5%
HONG KONG / SHANGHAI, Oct. 26 (Reuters) – Modern Land (1107.HK) missed a bond payment, the last Chinese real estate developer to do so, adding to concerns about the wider effects of the country’s debt crisis. giant China Evergrande Group (3333 .HK) and trailing on sector stocks.
The Chinese state planner is expected to meet with real estate companies carrying large dollar-denominated debt later today to take stock of their total issuance volume and repayment capacity, amid growing concerns about liquidity.
Modern Land (China) Co Ltd said in a filing on Tuesday that it had failed to repay principal and interest on its 12.85% senior bonds which matured on Monday due to “unexpected liquidity issues” .
Developers are defaulting “one by one,” said an investor exposed to Chinese high-yield debt, who asked not to be named because he was not authorized to speak to the media.
“The question is always, who’s next? “
Earlier this month, Fantasia Holdings Group (1777.HK) defaulted on a maturing dollar bond, raising concerns in international debt markets, already troubled by concerns over whether Evergrande would respect 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 plan to introduce a property tax.
The Chinese CSI 300 Real Estate Index (.CSI000952) fell 2.7% and the Hang Seng Mainland Properties Index (.HSMPI) fell almost 5.1%. The larger Hang Seng index (.HSI) edged down 0.6% while the Chinese CSI300 index (.CSI300) slipped 0.3%.
The prospect of contagion and other defaults weighed on the industry in a major setback for investors.
Chinese Estates Holdings Ltd (0127.HK) said it will recognize a loss of HK $ 288.37 million ($ 2.24 billion) in the current fiscal year following 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 was down 1.6% at a discount of more than 80% from face value, yielding around 1.183%, according to data provider Duration Finance.
Evergrande shares in China fell 7.1%. Shares of its electric vehicle (EV) unit (0708.HK) fell 5.5% after rising to 5.8% previously, with the developer saying it would prioritize growing its EV activity.
($1 = $0.1287 in Hong Kong)
Reporting by Donny Kwok in Hong Kong and Andrew Galbraith in Shanghai; Written by Anne Marie Roantree; Editing by Himani Sarkar
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