As the key debt deadline has passed, Evergrande bondholders have not yet been paid

Investors in China Evergrande stated that they have not received important bond payments after the 30-day grace period on Monday ended because the global debt-ridden developer is getting closer and closer to a formal default.

After the liquidity crisis forced it to fight for survival, the company has postponed payment of international bonds several times in recent months, and a coupon of US$82.5 million expired on Monday-a few days ago, the company said it needed to reorganize it. debt.

An investor who requested anonymity to hold shares in these bonds said that as of early Tuesday afternoon Hong Kong time, he had not received any funds and was waiting for an announcement in the next few days to confirm whether the payment has been made.

“I think they are unlikely to pay, but it is possible,” he said, referring to the delay in processing bond payments.

Another employee of the American Asset Management Company told the Financial Times that no payment was received on Tuesday.

A few months after Evergrande’s initial failure to pay interest in late September triggered global market volatility, missing the deadline this week may result in Evergrande’s formal default.

The company’s problems prompted an assessment of the health of China’s real estate industry and triggered widespread expectations of one of the largest restructurings in the country’s history.

As a sign of the seriousness of the situation, Beijing on Monday signaled a major easing of its policies for the first time since the early stages of the coronavirus pandemic. It is widely believed that the move was intended to reassure investors and prepare for Evergrande’s possible default.

The Hang Seng Mainland Real Estate Index rose as much as 4.1% on Tuesday, after the central bank said it would Release Rmb1.2tn By reducing the share of deposits that financial institutions must hold by 50 basis points, it provides (188 billion US dollars) liquidity to the banking system.

On Friday, Evergrande, which rarely addresses late payment issues in official documents, said that it had received a request related to a $260 million debt guarantee.

It added that “there is no guarantee that the group will have sufficient funds to continue to fulfill its financial obligations” and “plans to actively engage with overseas creditors to formulate a feasible restructuring plan”.

Late Tuesday, the rating agency Standard & Poor’s stated that payment demand is unlikely to constitute a default event.

The analyst wrote: “In any case, we think Evergrande’s default looks inevitable.”

The coupon payment due on Monday and the guarantee mentioned on Friday are worth a combined value of US$343 million, which is equivalent to the value of the shares sold by the chairman of Evergrande at the end of last month Hui Ka Yan -A transaction reduced his stake in the group from 77% to 68%. Evergrande did not say whether Xu Hui will use the proceeds to repay debts.

After announcing the establishment of a risk management committee composed of members of a large state-owned holding company, the company’s stock price rebounded as much as 8.3% in early trading on Tuesday.

In recent months, Evergrande’s liquidity crisis has spread to China’s economically important real estate developer industry.Another large developer Kaisa’s US$400 million bond matured on Tuesday, and investors last week Rejected an offer To extend its maturity period.

“The key question in the minds of investors is whether the government is willing to change its policy stance on the real estate industry,” said Zhang Zhiwei, chief economist of Pinpoint Asset Management.

The reduction in bank deposit reserve ratios caused the Hang Seng China Enterprises Index to rise by 1% on Tuesday.

But analysts doubt whether these measures will affect the real economy and The real estate industry quickly After new data showed that China’s real estate slowdown intensified last month.

“We expect liquidity to bottom out in the second quarter of 2022 at the earliest,” said Griffin Chan, an analyst at Citigroup China Real Estate Research.He added that any loosening policies will mostly benefit safer participants in the real estate industry, rather than People in desperate need And “may not be enough” to offset the real estate sales gap.

According to a survey conducted by China Real Estate Information Corporation, China’s largest developer’s sales in November fell by nearly 40% compared to the same period last year.

Chen Xingdong, chief China economist at BNP Paribas, said: “As regulations curb housing sales and new real estate investment, the real estate industry may continue to be a major drag on economic growth.”

Additional reporting by Xinning Liu in Beijing and Tom Mitchell in Singapore

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