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The 40-unit development by Tiong Lee Seng re-launched for collective sale at $148 mil

China asked companies to pay their offshore bonds and Hui Ka Yan , founder of China Evergrande Group, requested that he use his personal wealth to solve the company’s debt crisis.

After a meeting with key industry players, the National Development and Reform Commission (NDRC), which oversees foreign-debt issuance, encouraged companies to “optimize” their foreign debt structures to raise funds. It also stated that it would continue to meet “reasonable requirements” of firms for foreign debt repayment and rollover.

The regulator advised companies to adhere to “financial discipline” and market rules, and suggested that they prepare for the redemptions of principal and interest on bonds held overseas. The companies were not named in the statement.

China has imposed a clampdown on the real estate sector that is indebted. This makes it more difficult for developers to refinance, as they are facing falling sales and home prices. While multiple developers have defaulted in this month’s market, Evergrande paid a coupon payment last week to cover the grace period. Now, the focus is on Friday’s expiration of the grace period for another Evergrande dollar bond. Creditors are now bracing themselves for a debt restructuring that could be among the most expensive in China.

Beijing issued the directive to Evergrande’s chairman after the company missed the Sept 23 deadline to make a coupon payment for a dollar bond. Sources said that the source was informed by the sources. Sources said that Evergrande’s bank accounts are being monitored by local governments in China to ensure cash is not used to pay creditors and is used for unfinished housing projects.

After concerns about lower-rated Chinese borrowers being able to extend international borrowings after a rise in financing costs, the NDRC has taken the necessary steps. The yields on Chinese junk-rated United States Dollar bonds was about 20%, making it nearly half of all the dollar notes in distress worldwide.

Ms Ting Meng (an Asia credit strategist at ANZ Banking Group) said that “it shows the government’s attitude to rein in defaults offshore dollar bonds,” asking companies make every effort to service their loans. Ms Meng anticipates that “actual” actions will follow.

“This is not enough. Refinancing is difficult given the high yields next year and high redemptions.”

China is trying to minimize the impact of Evergrande, the most indebted global developer and holder of more than US$300billion (S$404billion) in liabilities. Even though the developer made an unexpected coupon payments on a US$2billion bond, creditors are still worried about a default and restructuring that could be among the most severe in China. Despite recent gains, Evergrande’s March dollar note that matures in US$2 billion trades below 30c per dollar despite its recent gains.

Chinese borrowers defaulted this year on approximately US$9 billion in offshore bonds, with the third being in the real estate sector. This has happened amid an Evergrande crisis that has put many investors on edge and forced authorities to clamp down on excessive leverage within the real estate sector.

Fantasia Holdings Group’s surprise default on its bond worth US$205.7 Million this month sparked a massive sell-off in offshore markets. Some investors saw it as a sign of an increasing liquidity crisis for China’s highly leveraged property companies. Sinic Holdings Group also defaulted this week.

According to a filing to the Singapore Stock Exchange, signs of stress in real estate increased on Tuesday following the failure by Modern Land China to pay the principal and interest on a bond worth US$250 million due Monday. According to the filing, Sidley Austin, company’s legal counsel, is helping them and they expect to soon engage independent financial advisors. Fitch Ratings has downgraded Modern Land from C to Restricted Default following the missed payment.

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