Evergrande shares plunge as Chinese property developer faces another debt deadline

China’s real estate stocks under pressure as another developer defaults on its own bond payment

Stuti Mishra
Tuesday 26 October 2021 14:28
<p>Evergrande is struggling with a $300bn debt  </p>

Evergrande is struggling with a $300bn debt

Chinese property giant Evergrande’s stock price dipped further on Tuesday over concerns related to bond payments of its own and that of another developer, putting pressure on the country’s overall real estate stocks.

Evergrande went down by almost 6 per cent in early morning trade on the Hong Kong Stock Exchange, but recovered some of its losses to close at a 4 per cent dip.

The debt-ridden property giant just managed to pull itself out of default last week by paying an offshore bond interest to bondholders, a month after the due date.

However, it has another deadline this Friday for one more US dollar-traded bond for $47.5m (£34.8m) that it had failed to pay in September.

China’s real estate stocks are now facing even more pressure as another Chinese real estate company, Modern Land, has defaulted on its own bond payment.

In a filing to the Singapore Stock Exchange, Modern Land said it had not repaid principal and interest on its 12.85 per cent senior notes – a kind of bond that takes precedence over other debts in the event of a default – that matured on Monday due to “unexpected liquidity issues”.

The news brought an index of Hong Kong-listed mainland property firms down by 4.7 per cent, with the mainland’s CSI 300 Real Estate Index going down by 2.4 per cent, according to news agency Reuters.

The woes of China’s real estate market began when the country clamped down on firms, making refinancing difficult. A series of measures were introduced to curb rising rentals, which were further exacerbated by falling prices and sales.

With Evergrande – China’s second-largest developer – struggling to remain on its feet, the sector has been facing a crunch, causing deep concerns among investors of the far-reaching impact on Chinese and global markets as well.

The company has been trying to sell its stakes, but has so far only managed to successfully close one deal with a commercial Chinese bank. This was after a recent deal with rival Hopson Development Holdings fell through.

The property giant had earlier said it was progressing with some of its residential projects in southern China, in a major relief to homebuyers, as some of them had began staging protests to get their money back from the firm.

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