FILE PHOTO: The sign of the China Evergrande Center building is seen on September 23, 2021 in Hong Kong, China. Reuters / Tyrone Shiu / FILE PHOTO
October 22, 2021
Claire Jim and Andrew Galbraith
HONG KONG/SHANGHAI (Reuters) – China’s Evergrande Group has funded interest payments on US dollar bonds, a person directly aware of the issue told Reuters on Friday. ..
The person said that Evergrande had sent $835 million to the trustee account of Citibank on Thursday.
The dispatch news to investors and regulators concerned about the wider repercussions of the default in global financial markets, could bring relief, in addition to assurances from Chinese authorities that creditor interests will be protected.
Still, developers with $300 billion in debt will have to be paid off with a range of other bonds. Little is known about whether the next major deadline is in a position to avoid defaults and pay off those loans, after just a week. ..
“They avoid short-term defaults and I’m a bit relieved to find liquidity,” said the Hong Kong-based on behalf of some bondholders, who did not wish to be identified. Debt restructuring lawyer said.
“But even so, Evergrande needs to restructure its debt. This payment could be a way to get some stakeholder approval before the hard work needed to restructure.”
It was not immediately clear how the struggling Evergrande was able to raise money to pay the bondholders, or whether the bondholders had already received the money.
Evergrande did not respond to Reuters’ request for comment. Citibank declined to comment. Those who knew the issue were not allowed to speak to the media and refused to reveal their identities.
The remittance news comes a day after financial information provider REDD said it has secured more time to pay off Evergrande-guaranteed default bonds issued by Jumbo Fortune Enterprises.
“This is a positive surprise,” said James Wong, portfolio manager at Gaoteng Global Asset Management, which was anticipating a default.
He said that this news will instil confidence among the bondholders. If Evergrande pays this time, I don’t know why it won’t pay next time. “
Evergrande began a 30-day grace period on September 23, September 29 and October 11, respectively, and missed a total of approximately $280 million in dollar bonds.
Subsequent non-payments trigger formal defaults and provisions among defaults on other dollar bonds.
Evergrande’s next payment deadline is October 29, and the 30-day grace period for the September 29 coupon will expire.
Evergrande dollar bond prices rose on Friday, with bonds rising more than 10% in April 2022 and 2023. According to period finance data, it was still trading at critical position levels, about a quarter of its face value.
While awaiting the announcement of the sale of shares in the asset management unit, which was abandoned this week, the company’s stake rose 7.8% a day after trading resumed after a two-week suspension.
Evergrande’s plight is echoed in the $5 trillion real estate sector in China, accounting for a quarter of the economy on some indicators, with a series of default declarations, downgrades and a slowdown in corporate bonds.
In the latest such move, Thursday’s Fitch Ratings defaulted the long-term foreign exchange issuer of Cynic Holdings (Group) Co Ltd as developers had not paid the $250 million bill by October 18. Rating has been changed from “C” to “Ban”. miss”.
Nevertheless, Evergrande news shows the Hang Seng Mainland Real Estate Index rose more than 4%, while the broader Hang Seng Index rose 0.25%.
It also helped a smaller peer of Evergrande, Casa Group Holdings Ltd., where the price of dollar-denominated bonds soared.
Cassa was the first Chinese developer to set the default in 2015 and the Evergrande crisis is once again in the limelight.
In the mainland market, the CSI300 real estate index rose 6.5%, and the index tracking the broader real estate sector was targeting the biggest increase in nearly two months.
Asked whether rivals would intervene to help ease the liquidity crisis, Yu Liang, president of China Vanke Co Ltd, the third-largest developer in the United States, said developers ensure their safety first. He said it was necessary.
Yu told the company’s forum on Friday, “Everyone gets chills when ‘winter’ arrives in the region…
Evergrande’s concern has been snowing for months. Eighty percent of its value has been lost due to a lack of resources earmarked for the debt of over $300 billion.
Established in Guangzhou in 1996, Developers embodies the Bohemian era of lending and manufacturing. But that business model was sabotaged by hundreds of new regulations designed to curb the developer loan frenzy and promote affordable housing.
Analysts said the outlook for demise would question what would happen to Evergrande’s more than 1,300 real estate projects in more than 280 cities, and what would affect the broader real estate sector.
Bank exposure to developers is also extensive. The leaked 2020 document, branded as fake by Evergrande, was taken seriously by analysts and showed the company’s debt to over 128 banks and 121 non-banking institutions.
“While little is clear about the position of bank credit for fixed real estate projects, the land business is on Evergrande as we know pre-sales of projects have declined significantly. Prospects for liquidity supply in the short term,” analysts said. No. Travis Lundy from Quidity Advisors in Hong Kong.
(Reporting by Claire Jim and Scott Murdoch in Hong Kong, Samuel Shen and Andrew Galbraith in Shanghai, Anshman Daga and Tom Westbrook in Singapore, Mark Jones in London, writing by Sam Holmes, edit Christopher Cushing)
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