Chinese Builders Scramble for Ways to Avoid Bond Defaults
- Modern Land seeks extension, Xinyuan swap called distressed
- China high-yield dollar bonds tumble as much as 10 cents more
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Chinese builders are looking to payment extensions or debt exchanges to avoid default on imminent bond obligations as liquidity conditions tighten for the real estate sector.
Modern Land (China) Co. is asking holders for a three-month extension on $250 million dollar bond due to mature Oct. 25 while also announcing two top executives plan to loan the builder about $125 million. Xinyuan Real Estate Co. has proposed paying just 5% of principal on a note due Oct. 15 and swapping that debt for bonds due 2023. Fitch Ratings called the move a distressed debt exchange while downgrading the firm to C.