Modern Land Joins The Evergrande Saga Missing Payment on $200 million Bond
Contagion fears in global debt markets added with the latest development of Modern Land and investors are asking one question "who's next ?"
Modern Land (1107.HK) is the latest Chinese real estate developer to join the Evergrande saga. The company on Tuesday announced that the developer missed both interest and principal payment on its $250 million bond, according to a regulatory filing in the Singapore Stock Exchange (SGX) where the bond is listed.
The company reported it is working with its legal counsel Sidley Austin and also expects to engage financial advisors soon to find possible solutions out of the crisis.
The published regulatory statement read, “owing to unexpected liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment, the real estate industry environment and the COVID-19 pandemic faced by the group,”.
Chinese real estate players Fantasia Holdings and Sinic Holdings already defaulted on offshore bonds earlier this month. Evergrande on the other hand has another coupon payment due on this Friday and earlier avoided much anticipated default by meeting its debt payment in the 11th hour.
The fear of contagion in global debt market escalated in the recent weeks with investors questioning “who’s next?”.
Liu He, Vice Premier of the People’s Republic of China earlier commented Evergrande risks are controllable and reasonable capital demand from the property companies are being met, as reported by the state news agency Xinhua.
Despite the contagion fears, some positive developments in the Chinese real estate sectors reflects contagion sentiment is to be short lived.
China Overseas Land a state enterprise and China Resources Land reportedly been active in land acquisition despite negative outlook in the property sector. Besides, two other real estate developer Country Garden and Hopson Development both showed interest in buying assets from debt ridden Chinese real estate firms.
Dalian Wanda Group- a Beijing based real estate group applied to list its commercial property business in Hong Kong to raise $3 billion and $4 billion, according to Nikkei Asia.
According to Reuters data, China’s CSI 300 Real Estate Index (.CSI000952) fell 2.6%, and the Hang Seng Mainland Properties Index (.HSMPI) slumped nearly 5%.