Evergrande Fails to Make a $45.2M Interest Payment on Second Offshore Bond

Heavily-indebted Evergrande has once again failed to make an interest payment on an offshore bond, this time to the tune of US$45.2 million. The property developer did, however, come to an agreement with a Chinese bank to sell its 20% stake, which sent Evergrande’s otherwise worthless stock up from last week’s catastrophic lows.

As of 9:30 PM Hong Kong time, Evergrande had yet to make a $45.2 million interest payment on another offshore dollar bond due 2024, Bloomberg revealed, citing bondholders familiar with the matter. Similar to last week’s debacle when Evergrande also failed to make an $83.5 billion bond payment, the 30-day grace period before a default can officially be declared has thus unofficially commenced.

Last week, Evergrande allegedly came to a private consensus with onshore bondholders to make arrangements for a separate yuan-denominated coupon payment, giving markets a momentary sigh of relief. However, with Evergrande still mum on the dollar-denominated offshore bond payment, as well as today’s $45.3 million obligation, investors are becoming increasingly worried that they will face substantial losses once the 30-day grace period is over.

In the meantime, though, cash-strapped Evergrande announced via an exchange filing that it has agreed to sell its $1.5 billion stake in Shengjing Bank to a government-owned asset manager. Shengjing, which was one of the main lenders to Evergrande, allocated the proceeds from the stake divestment deal towards paying off the real estate developer’s debt with the bank.

However, the sale is peanuts compared to Evergrande’s heaping debt pile of $300 billion. The property developer continues to be embroiled in a worsening liquidity crisis that is spilling over into the remainder of China’s housing sector, as well as broader global financial markets.

Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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