Modern Land Shares Dive After Resuming Trade Amid Repayment Demands

By Yi Wei Wong

Shares of Modern Land (China) Co. fell as much as 38% after the Chinese property developer resumed trading amid creditor demands for the early repayment of debt.

Modern Land's shares, trading for the first time since October when it failed to repay a US$250 million dollar bond, were last down 37% at HK$0.24 in mid-morning trade in Hong Kong.

The Beijing-based developer sought a trading resumption early Monday after saying that some holders of its offshore bonds, along with other creditors, had demanded the early repayment of debt, and that it was in talks to restructure offshore debt and secure waivers related to creditor enforcement actions.

The company said its aggregate outstanding principal amount off offshore senior notes stands around US$1.35 billion. It added that it had appointed financial advisers to help assess liquidity and "formulate an overall plan for feasible remediation actions."

Trading in the company's debt securities remains suspended.

The liquidity levels of Chinese developers have fallen abruptly due to tighter government curbs on the real estate sector amid concerns over debt levels and overheating.

Nivedita Sunil, an emerging-market analyst at Lombard Odier Investment Managers, noted that more than 400 new regulations had been issued for the Chinese property sector last year, including curbs on mortgages and bank loans.

"What started as an idiosyncratic risk is now becoming systemic," Ms. Sunil said in a research note. "There is now a 30% default rate in the offshore USD China [high-yield] real estate market."

Modern Land last year attributed its failed bond payment to an unexpected cash crunch caused by the macroeconomic environment, falling home sales and the Covid-19 pandemic. It had initially planned to buy back some of its US$250 million dollar bonds, and possibly extend the maturity date on the rest, but later scrapped the plan, citing liquidity problems.

The company posted contracted sales of CNY36.05 billion in 2021, down from CNY42.21 billion in 2020.

Write to Yi Wei Wong at yiwei.wong@wsj.com

(END) Dow Jones Newswires

January 09, 2022 22:56 ET (03:56 GMT)