(Corrects data on bonds issued by Chinese developers in fifth
paragraph after official correction by Refinitiv)
HONG KONG, Oct 12 (Reuters) - China Evergrande Group
on Tuesday missed its third round of bond payments in
three weeks, intensifying market fears over contagion involving
other property developers as a wall of debt payment obligations
come due in the near-term.
Some bondholders said they did not receive coupon payments
totalling $148 million on Evergrande's April 2022, April 2023
and April 2024 notes due by 0400 GMT on Tuesday, following two
other payments it missed in September.
That puts investors at risk of large losses at the end of
30-day grace periods as the developer wrestles with more than
$300 billion in liabilities.
Evergrande did not immediately respond to a request for
A total of $92.3 billion bonds issued by Chinese developers
will be due in the next year, Refinitiv data show.
"We see more defaults ahead if the liquidity problem does
not improve markedly," said brokerage CGS-CIMB in a note, adding
developers with weaker credit rating are having difficulty in
refinancing at the moment.
Trading of high-yield bonds remained soft on Tuesday
following a rout in the previous session on fears about
fast-spreading contagion in the $5 trillion sector, which
accounts for a quarter of the Chinese economy and often is a
major factor in policymaking.
Shanghai Stock Exchange data showed the top five losers
among exchange-traded bonds in morning deals were all issued by
Small developers Modern Land and Sinic Holdings
were the latest scrambling to delay deadlines, after
Evergrande and Fantasia missed their payments since
Modern Land's dollar bond due 2023 plunged
25% to 32.250 cents on the dollar, while Sinic's bond due 2022
rose 12% to 19.35 cents, yielding over 1380%.
Modern Land, whose shares dropped over 3% to new low on
Tuesday, had requested bondholders on Monday to delay a
repayment due later this month for three months, while Sinic
said it would likely default next week.
Aoyuan's bond due 2025 declined 3.5% while
Sunac's bond due 2024 lost 2.6%.
On Monday, Fantasia Holdings' unit limited trading
in its Shanghai bonds, which is often done ahead of defaults.
While global attention has been focused on missed dollar
debt payments by Chinese property issuers, market indicators
suggested that worries about contagion and a slowing economy are
Market players say the sell-off, however, appears limited to
more riskier bond names.
"The market is trading more rationally now, according to
different quality and rating of the companies, rather than
selling off on the whole sector," said Michael Wong, director at
CP Securities based in Hong Kong.
The cost of insuring against a China sovereign default
continued to rise on Tuesday, with 5-year credit default swaps
- which investors typically use as a hedge
against rising risk - hitting its highest point since April
The option-adjusted spread on the ICE BofA Asian Dollar High
Yield Corporate China Issuers Index pulled back to
2,061 basis points on Monday evening U.S. time, just off its
previous all-time high of 2,069 basis points on Friday.
Shares of several other property firms, however, fared
better as markets bet on more loosening of policies following
northeastern city of Harbin's measures to support property
developers and their projects.
Top developers Country Garden and Sunac China
both rose 2%.
Evergrande's electric vehicles unit jumped over
10% after it vowed to start producing cars next year.
(Additional reporting by Scott Murdoch; Editing by Shri