Crisis in China’s property market deepens as developer asks creditors for breathing space to repay corporate bond

  • Modern Land has requested that investors postpone the maturity date of a £183 million bond from October 25 to January 25.
  • On that day, Modern Land’s April 2023 bond with a 9.8 percent coupon fell more than 25% to 32.25 cents.
  • The slide highlighted the Chinese property market crisis, which has centred on Evergrande and could spill over into the global economy.

China’s property bonds fell across the board today after a developer requested a delay in the repayment of a credit that was due in a fortnight.


Modern Land requested that investors postpone the maturity date of a £183 million bond from October 25 to January 25 in order to ‘avoid any potential payment default.’

According to financial data provider Duration Finance, the real estate firm’s April 2023 bond, which pays an interest rate of 9.8 percent, fell more than 25% to 32.25 cents on the day, while the company’s shares fell more than 2%.

The slide highlighted the Chinese property market crisis, which has centred on Evergrande and could spill over into the global economy.

The company is in debt to the tune of more than £220 billion, and it is now waiting for word on £108 million in looming debt coupons.

Bonds issued by other property developers were also under pressure.


The October 2022 bond of Ronshine China Holdings fell 12.9 percent to 52.187, while the February 2023 bond of Guangzhou R&F Properties Co fell 8.37 percent to 55.233.

Clarence Tam, fixed income portfolio manager at Avenue Asset Management in Hong Kong, commented on the downward trend, saying, ‘It’s a disastrous day.’ Even investment-grade bonds are trading at around 80 cents on the dollar.

‘We believe it is due to global fund outflows.’ It’s unusual to see minus 10 points… these IG quality bonds are typically liquid. And, fundamentally, we are concerned that onshore mortgage management will have a significant impact on the developers’ cash flow.’


In equity markets, the Hang Seng Property and Construction sub-index fell 0.4 percent, while the broader index rose nearly 2 percent.

The latest drop in property bonds comes after a week of heavy selling of Chinese high-yield dollar debt, particularly after smaller developer Fantasia Holdings Group Co missed a £151 million international market debt payment deadline.

The option-adjusted spread on the ICE BofA Asian Dollar High Yield Corporate China Issuers Index was 2,069 basis points on Friday evening US time, the widest ever recorded.

Last Friday, advisers to offshore bondholders expressed their desire for greater transparency from Evergrande, as well as more information about the company’s plan to divest some businesses.

Hui Ka Yan, once China’s richest man, runs the company, which claims to have built homes for over 12 million people since its inception in 1996.

This year, the stock has dropped by 80%.


On October 4, the stock was suspended on the Hong Kong stock exchange pending a “major transaction” involving the sale of a 51% stake in its property management division for £3.7 billion.

Expectations are that it will make semi-annual payments on its April 2022, April 2023, and April 2024 dollar notes, which are due on 11 October, as it prioritises onshore creditors and remains silent on its dollar debt obligations.

As a result, offshore investors are concerned about the possibility of large losses at the end of 30-day grace periods.

by Rachel Buscall

by Rachel Buscall

Co-Founder & Managing Director at New Capital Link. Having started her career in the financial sector, Rachel demonstrated a natural flair for entrepreneurship.

New Capital Link

Alternative investment specialists offering structured opportunities across the UK & Overseas.

New Capital Link is a boutique London-based introducer that offers unique UK & global investment opportunities worldwide.

Recent Posts

Follow Us

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be very complex and high risk.

What are the key risks?

1. You could lose all the money you invest

If the business offering this investment fails, there is a high risk that you will lose all your money. Businesses like this often fail as they usually use risky investment strategies. 

Advertised rates of return aren’t guaranteed. This is not a savings account. If the issuer doesn’t pay you back as agreed, you could earn less money than expected or nothing at all. A higher advertised rate of return means a higher risk of losing your money. If it looks too good to be true, it probably is.

These investments are sometimes held in an Innovative Finance ISA (IFISA). While any potential gains from your investment will be tax free, you can still lose all your money. An IFISA does not reduce the risk of the investment or protect you from losses.

2. You are unlikely to be protected if something goes wrong

The business offering this investment is not regulated by the FCA. Protection from the Financial Services Compensation Scheme (FSCS) only considers claims against failed regulated firms. Learn more about FSCS protection here. or

Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.

The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm or Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here.

3. You are unlikely to get your money back quickly

This type of business could face cash-flow problems that delay interest payments. It could also fail altogether and be unable to repay investors their money. 

You are unlikely to be able to cash in your investment early by selling it. You are usually locked in until the business has paid you back over the period agreed. In the rare circumstances where it is possible to sell your investment in a ‘secondary market’, you may not find a buyer at the price you are willing to sell.

4. This is a complex investment

This investment has a complex structure based on other risky investments. A business that raises money like this lends it to, or invests it in, other businesses or property. This makes it difficult for the investor to know where their money is going.

This makes it difficult to predict how risky the investment is, but it will most likely be high.

You may wish to get financial advice before deciding to invest.

5. Don’t put all your eggs in one basket

Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. 

A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here:

For further information about minibonds, visit the FCA’s website here.