Wednesday, January 26

Developer failure to pay indicates more stress: Evergrande update

More signs of stress emerged in China’s indebted real estate sector after Modern Land China Co. defaulted on a dollar bond, ahead of a test later this week for China Evergrande Group on an expired coupon.

Modern Land failed to pay principal or interest on a $ 250 million bond due Monday, according to a filing on the Singapore Stock Exchange on Tuesday morning. The company is working with its legal adviser Sidley Austin and hopes to hire independent financial advisers soon, according to the document.

China has cracked down on the indebted real estate sector, making it difficult for developers to refinance as they face falling home prices and sales. Several developers have defaulted this month, although Evergrande paid a coupon last week before a grace period expired.

The focus is now on the end of a grace period on another Evergrande dollar bond later this week. Still, the company’s creditors are preparing for an eventual debt restructuring that could be among the largest in China.

Key developments:

  • Chinese defaults record in the spotlight as modern earth misses deadline
  • Chinese developer Ronshine says he paid the coupon expiring on Monday
  • Modern Earth’s Lost Payment Shows Stress: What to Watch in China
  • Evergrande interest payment reached some bondholder accounts
  • China injects the most cash since January as local debt sales rise
  • Evergrande says construction is going well on 40 projects in Guangdong
  • China Expands Property Tax Lawsuits With Homeowners Tax

China’s Growth Forecasts Cut Amid Real Estate Recession (12:31 PM HK)

Economists have again lowered their growth forecasts for China over the next year amid power shortages and a worsening housing market recession, a Bloomberg survey shows.

Gross domestic product is likely to expand 8.1% in 2021 and 5.3% next year, according to the median estimate from the latest Bloomberg quarterly survey. That’s down from a previous projection of 8.4% and 5.5% respectively. GDP growth forecasts for the fourth quarter were slashed by almost one percentage point to 3.5%.

Developer Ronshine Payment Coupon Expires Monday (12:24 PM HK)

Ronshine China Holdings Ltd. paid the $ 30.2 million in interest due Monday on a dollar bond, according to a company media representative. He transferred the funds on October 20, and the bond custodian confirmed the same day the payment was received, the representative said.

Chinese Researcher Says Evergrande ‘Not Insolvent’ (10:53 AM HK)

Former state investigator Jia Kang said he believes Evergrande is not insolvent and that the crisis will be resolved according to market principles, in comments made in an interview with the official Changjiang Daily newspaper about the implication of a property tax for the real estate industry.

“The Evergrande incident is a short-term problem,” Jia said in the article posted on his WeChat account on Tuesday. “It is quite clear now that it is not insolvent.”

The developer “must manage its own portfolio of assets in accordance with business principles,” he said, adding that “the ripple effect on the real estate industry from the Evergrande crisis can be avoided.”

He also said that the possibility of other companies acquiring equity stakes in the developer should not be ruled out. Jia, now a consultant, was previously director of the Ministry of Finance’s tax science research institute.

Non-payment puts record Chinese defaults into focus (10:16 a.m. HK)

Chinese borrowers have defaulted on a record of at least $ 8.7 billion in offshore bonds so far this year, with the real estate industry accounting for a third of that amount. That comes as authorities clamp down on excessive leverage in real estate.

Missed Modern Land Payment Shows Stress (8:38 a.m. HK)

The nation’s developers with the worst balance sheets are being crushed by rising borrowing costs, a phenomenon that is intensifying as bills come due this month.

Modern Land became at least the fourth real estate company to default on dollar bonds in October, after Fantasia Holdings Group Co., Sinic Holdings Group Co., and China Properties Group Ltd. Evergrande, which pulled back from the brink of default on the Paying off a bond coupon just before the deadline last week, he faces an interest payment of $ 45.2 million on Friday.

China Developers Set Another Monthly Downgrade Record (3:44 PM HK)

Credit rating cuts for Chinese developers have accelerated further in October, hitting a record for the second month in a row. There were 44 downgrades by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings as of Oct. 21, after 34 downgrades throughout September, according to data compiled by Bloomberg.

Evergrande deadlines:

Dollar bonds Coupon expiration date Amount

(A million dollars)

EVERRE 8.25% due in 2022 September 23 83.53
EVERRE 9.5% due in 2024 September 29th 45.17
EVERRE 9.5% due in 2022 October 11th 68.88
EVERRE 10% maturing in 2023 October 11th 42.5
EVERRE 10.5% due in 2024 October 11th 36.75
TIANHL 13% due 2022 November 6th 41.93
TIANHL 13.75% due in 2023 November 6th 40.56

© 2021 Bloomberg

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