The default was expected after the company missed a dollar private bond payment and delayed onshore debt payments, she said. Shimao’s announcement of a default, rather than an extension plan proposal, “shows the company’s weak financial situation to meet its debts payment schedule and the necessity for an overall debt restructuring plan”, said Ting Meng, senior Asia credit strategist at ANZ Bank China. The builder is among the largest property debt issuers in China. There is no grace period for the principal on the company’s $1bn dollar bond, according to the note’s offering circular, Bloomberg reported. If it cannot, “creditors may have the right to demand acceleration of repayment” and take enforcement actions, according to the company. Shimao also has not made principal payments involving some other offshore debts and has been in discussion with creditors while trying to reach “amicable resolutions”, it said in a Hong Kong exchange filing.Ĭhina urges Evergrande to avoid default on bond payments “That raises our concerns that the extent of the debt crisis is beyond any market watcher’s imagination.” “The contagion has spread from Evergrande to Sunac and now Shimao,” said Kristy Hung, a Bloomberg Intelligence analyst. The country’s 14th-biggest developer by contracted sales has faced mounting worries about its financial health since late last year, with stress in the industry taking its toll on a widening set on players. Shimao, whose projects include a five-star hotel built into an abandoned quarry, was once considered largely immune to the sweeping crackdown that has engulfed larger peers such as China Evergrande Group and Sunac Group Holdings. The luxury builder’s bonds have been priced in deep levels of distress since the start of the year, with most notes falling to record lows of below 15 cents on the dollar after the company missed the repayment date on a private note. The company has about $5.5bn in outstanding offshore bonds. Shimao’s delinquency is among the biggest dollar payment failures so far this year in China. Shares in its electric vehicle (EV) unit fell 5.5% after earlier rising as much as 5.8% as the developer said it would prioritise the growth of its EV business.Chinese developer Shimao Group Holdings missed payment on a $1 billion bond that was due on Sunday, its first default on a public bond after months of mounting stress. Modern Land's 11.8% February 2022 bond was down 1.6% at a discount of over 80% from its face value, yielding about 1,183%, according to data provider Duration Finance.Ĭhina Evergrande shares fell as much as 7.1%. The prospect of contagion and more defaults have weighed on the sector in a major setback for investors.Ĭhinese Estates Holdings Ltd said it would book a loss of HK$288.37 million ($2.24 billion) in the current fiscal year from its latest sale of bonds issued by Chinese property developer Kaisa Group Holdings Ltd. The broader Hang Seng index edged down 0.6% while China's CSI300 index slipped 0.3%. Shares of property developers extended losses, hurt also by concerns over China's plans to introduce a real estate tax.Ĭhina's CSI 300 Real Estate Index fell 2.7%, and the Hang Seng Mainland Properties Index dropped nearly 5.1%. Modern Land (China) Co Ltd said in a filing on Tuesday that it had not repaid principal and interest on its 12.85% senior notes that matured Monday due to "unexpected liquidity issues".ĭevelopers are defaulting "one by one", said an investor with exposure to Chinese high-yield debt, who asked not to be named as he was not authorised to speak with media.Įarlier this month, Fantasia Holdings Group defaulted on a maturing dollar bond that heightened concerns in international debt markets, already roiled by worries over whether Evergrande would meet its obligations.Įvergrande, which narrowly averted a costly default last week, is reeling under more than $300 million in liabilities and has a major payment deadline on Friday. Modern Land has missed a bond payment, the latest Chinese property developer to do so, adding to worries about wider effects of the debt crisis at behemoth China Evergrande Group and dragging on shares in the sector.Ĭhina's state planner is set to meet with property firms carrying large dollar-denominated debts later in the day to take stock of their total issuance volume and repayment capability, amid the mounting concerns about liquidity.
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