Evergrande complex in Huaian in China’s eastern Jiangsu province.
AFP via Getty Images
Chinese property developer Modern Land said Tuesday it had missed repaying principal and interest on a $250 million dollar bond, in yet another sign of the troubles encountered by the country’s overleveraged property sector
Modern Land (ticker 1107.HongKong) said in a filing with the Singapore Stock Exchange that “owing to unexpected liquidity issues” due to the macroeconomic and real estate environments and the Covid-19 pandemic, it didn’t meet the payment due Oct. 25
China Evergrande Group (3333.HongKong), the country’s largest property and real estate group, is struggling with $305 billion worth of debt, and narrowly avoided default last week by repaying a $83.5 million coupon payment at the last minute.
China’s government and regulators have tightened control on leverage in the property sectors in the past few months, which makes it harder for developers to refinance, and for their customers to take on debt to buy houses.
Fears of contagion are increasing after the Evergrande scare, and the sector’s shares have been battered, with increasing concerns over the past few weeks on indications that China is preparing to introduce a real estate tax. It would most likely be experimented on in some regions.
Evergrande shares were down more than 4% Tuesday, nearing their September all-time low. The Hang Seng Mainland Property Index fell in similar proportion.
Chinese authorities were due to meet Tuesday with property developers with large foreign debt loads to assess their repayment capabilities.
Write to Pierre Briançon at [email protected]
