[ad_1]
(Bloomberg) – Modern Land (China) Co. is seeking a three-month extension on a dollar bond due Oct. 25, in another example of a developer seeking to deal with liquidity issues amid fallout from China Group Evergrande. The bonds of some real estate companies have collapsed.
Bloomberg’s Most Read
Modern Land, based in Beijing, is seeking to extend the deadline to “improve our management of liquidity and cash flow and avoid any potential default,” she said Monday morning on the Hong Kong Stock Exchange.
The disclosure came as investors scrutinize the real estate industry to see which developer could show signs of liquidity stress next, following the unexpected default of Fantasia Holdings Group Co. last week and lingering uncertainty at Evergrande, which has coupon payments on an additional three dollars. notes due Monday. Chinese high yield dollar bonds fell as much as 5 cents on the dollar Monday morning, traders said, adding to last week’s drop.
According to Gilbert Wong, head of quantitative research Asia at Morgan Stanley, tensions in the Chinese dollar bond market could soon create headaches for the country’s stock traders. High yield credit spreads over comparable T-bills are the widest on record – at around 1,866 basis points on an options-adjusted basis, according to data compiled by Bloomberg on Friday.
But a measure of stock volatility has actually declined so far this month. The pair have shown a close relationship in recent years, which suggests their divergence may not last.
Meanwhile, Kirkland & Ellis and Moelis & Co. are working on contingency plans with offshore holders of Evergrande bonds who fear the company could sell off the assets investors were relying on to back up their claims if the company s ‘collapses. Moelis and Kirkland are advising a group that so far includes six members holding $ 2.5 billion in Evergrande offshore bonds, a Moelis chief executive said on Friday during a call with the bondholders.
Key developments:
-
The daring founder of Evergrande seeks a way out of the crisis
-
Credit anxiety is coming to your stocks: what to watch out for in China
-
Evergrande’s creditors brace for battle over offshore assets
-
Looming bond payments for China’s most struggling companies
Morgan Stanley improves property in China on likely easing of policy (12:10 p.m. HK)
Morgan Stanley has upgraded its view of the Chinese real estate sector to ‘attractive’ versus ‘online’ as it sees an increasing likelihood of policy easing as default risks and housing market weakness are largely overwhelming. taken into account. “We believe this is an inflection point for approaching China’s real estate policy,” analysts led by Elly Chen wrote in a note dated Sunday. “Real estate stocks will respond to the easing of policy, which seems more likely now.”
China real estate needs policy adjustment to restore confidence: Goldman Sachs (11:47 HK)
The industry needs some sort of policy shift in order to restore confidence, Kenneth Ho, head of Asian credit strategy at Goldman Sachs, said in an interview with Bloomberg TV on Monday. Ho says the industry could see more defaults as part of the government’s deleveraging efforts, and “the market is accommodating broader tail risk, which we don’t think is unfair.”
Chinese High Yield Dollar Bonds Drop To 5 Cents: Traders (10:26 HK)
Among the declines, the 6.35% Aoyuan note due 2024 fell 12.7 cents on the dollar to 58 cents, according to prices compiled by Bloomberg at 12:12 p.m. for their lowest ever closing levels.
Chinese listed dollar bond yields jumped 291 basis points to 17.54% last week, the highest in about a decade, according to a Bloomberg index.
Fantasia Group China Cut to A From AA + at China Chengxin (10:03 a.m. HK)
China Chengxin International demoted Fantasia Group China and placed it on a watch list for possible demotion, according to a statement posted on the Cninfo website. He added that the unpaid dollar bonds of parent company Fantasia Holdings have a significant negative impact on the credit quality of Fantasia Group China, Chengxin said.
Goldman says property accounts for nearly a quarter of China’s GDP (9:22 a.m. HK)
China’s real estate sector accounts for up to 23.3% of the country’s gross domestic product if all industry-related business activities are included, Goldman Sachs Group Inc. said in a report on Monday.
A wide range of estimates of the size of the Chinese real estate sector – up to around 30% of GDP – have been reported by the media and other analysts. The variation is mainly due to different definitions of the scope of the industry, according to the report.
Modern Land Seeks to Extend Bond Maturity (8:15 a.m. HK)
Modern Land is seeking consent to extend the maturity of its 12.85% senior bonds due 2021 by three months, the statement said. It is also asking for permission to redeem 35% of the bond’s principal on October 25. The company said in a separate filing that Chairman Zhang Lei and Chairman Zhang Peng intended to loan it about 800 million yuan ($ 124 million), a move expected to be completed in two to three months.
Evergrande’s reach goes beyond simple house building (6:06 a.m. HK)
Evergrande is currently the biggest financial problem in China, and it is quickly becoming an issue outside the country’s borders. In short, the giant real estate developer has $ 300 billion in debt and is expected to largely default on bond payments. The group has 1,300 projects in more than 280 cities. But its scope goes far beyond the construction of houses. Its billionaire owner Hui Ka Yan has his fingers in the pies of electric vehicles and mineral water and football media production.
Fantasia’s default may suggest a potential problem with payment (6 a.m. HK)
Fantasia’s default on principal payments by the October deadline may indicate a potential issue payable, given the number of redemptions the company has recorded since May 2021, according to a Bloomberg Intelligence report. This goes directly against the Chinese government’s directive on issuer conduct, risking serious consequences, according to the report.
The law could risk further destabilizing the high yield bond market, as fundamentals may no longer dictate default risks, but could be offset by increased bond buybacks from more reputable companies.
Interest terms for Evergrande dollar bonds:
Bloomberg Businessweek Most Read
© 2021 Bloomberg LP
[ad_2]
Source link