Modern land walks the path of China Evergrande, creates default

Modern land walks the path of China Evergrande, creates default

Tuesday morning brought shocking news for China’s real-estate sector that is already suffering from defaults caused by gigantic groups like China Evergrande. Modern Land, the default developer had reported missing payments. It added to the woes of spiralling effects following the debts. Moreover, it dragged the shares down. 

Meanwhile, China’s state planner is looking forward to meeting with those property firms that carry large dollar-denominated debts. They will meet them later in the day to take stock of the situation considering repayment capability and total issuance volume. 

Interestingly, Evergrande had a narrow escape with a costly default the previous week. The company is reeling under liabilities worth USD 300 million. Moreover, it has a significant payment deadline on coming Friday. 

In a filing, Modern Land Co Ltd. said it did not repay interest and principal amounts on its 12.85 per cent senior notes that witnessed maturity on Monday. 

On the other side, Fantasia Holdings Group has added salt to wounds by emerging as another defaulter. It defaulted on the maturity dollar bond, earlier in October. It skyrocketed concerns in debts markets internationally. 

The debt market is already roiled whether China Evergrand will take a stand to pay its obligations in future. 

Notably, stocks of Chinese property companies saw the extension of losses further. Moreover, the news of the Chinese government looking forward to adding a real estate tax has also added to the concerns. 

Following the report, China’s CSI 300 Real Estate index plunged by 2.6 per cent. Moreover, the Hang Seng Mainland Properties Index slipped by 5 per cent. The prospect of more defaults and contagion has weighed on it that has got investors worried. 

As per Chinese Estates Holdings Ltd, it would lose around  HK$288.37 million in the following financial year. 

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