Chinese developer Modern Land defaults on bond; property shares drop

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HONG KONG/SHANGHAI — Trendy Land has missed a bond fee, the newest Chinese language property developer to take action, including to worries in regards to the wider impression of the debt disaster at behemoth China Evergrande Group, and dragging on shares within the sector.

China’s state planner was set to satisfy property companies carrying massive dollar-denominated money owed on Tuesday to take inventory of their complete issuance quantity and reimbursement functionality, amid mounting concern about liquidity.

Trendy Land (China) Co Ltd mentioned in a submitting that it had not repaid principal and curiosity on its 12.85% senior notes that matured on Monday as a result of “surprising liquidity points.”

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The missed fee comes days after the corporate, a smaller developer, scrapped plans to hunt investor consent to increase the maturity date of its bond by three months, saying doing so was not in the perfect pursuits of it and its stakeholders.

Rankings company Fitch earlier this month lower Trendy Land’s score to “C” from “B” over the consent solicitation to vary bond phrases, saying it thought-about the transfer a distressed debt alternate.

Builders are defaulting “one after the other,” mentioned an investor with publicity to Chinese language high-yield debt, who requested to not be recognized as he isn’t approved to talk to media.

“The query is at all times, who’s subsequent?”

This month, Fantasia Holdings Group defaulted on a maturing greenback bond that heightened issues in worldwide debt markets, already roiled by worries over whether or not Evergrande would meet its obligations.

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Evergrande, which narrowly averted a pricey default https://www.reuters.com/world/china/china-evergrande-sends-funds-trustee-bond-coupon-due-sept-23-source-2021-10-22 final week, is reeling underneath greater than $300 million in liabilities and has a significant fee deadline on Friday.

Shares of property builders prolonged losses, damage additionally by concern over China’s plans to introduce an actual property tax https://www.reuters.com/enterprise/finance/china-says-will-roll-out-property-tax-pilot-scheme-some-regions-xinhua-2021-10-23.

China’s CSI 300 Actual Property Index fell 2.8%, and the Dangle Seng Mainland Properties Index dropped 4.3%. The broader Dangle Seng index edged down 0.4% whereas China’s CSI300 index slipped 0.3%.

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The prospect of contagion and extra defaults have weighed on the sector in a significant setback for buyers.

Chinese language Estates Holdings Ltd mentioned it will e-book a lack of HK$288.37 million ($2.24 billion) this fiscal 12 months from its newest sale of bonds issued by Chinese language property developer Kaisa Group Holdings Ltd.

Trendy Land’s 11.8% February 2022 bond was down 1.6% at a reduction of over 80% from its face worth, yielding about 1,183%, in line with information supplier Length Finance.

China Evergrande shares ended the day down greater than 4%. Shares in its electrical automobile (EV) unit closed down 6.75% after earlier rising as a lot as 5.8%, after the developer mentioned it will prioritize the expansion of its EV enterprise. (Reporting By Donny Kwok in Hong Kong and Andrew Galbraith in Shanghai; Writing by Anne Marie Roantree; Modifying by Himani Sarkar, Robert Birsel)