Evergrande Makes Local Bond Payment as Offshore Investors Prepare for Official Default

Evergrande continues to remain barely afloat, despite making interest payments on a local bond.

According to Reuters, Evergrande has successfully fulfilled an interest payment to domestic bond holders due Tuesday, after previously promising to make the payment. However, offshore investors have yet to receive an update on previously missed coupon payments from the embattled real estate developer, sparking concerns that the company is even closer to an official default. The 30-day grace period for a march 2022 coupon payment that was due September 23 is slated to expire this week, and will be officially filed under default status.

In the interim, as the company continues its battle with shoring up even the smallest bit of liquidity, Reuters revealed that Evergrande’s pending deal to sell a 51% stake in its property services unit to Hopson Development Holdings for approximately HK$20 billion has been suspended, awaiting official approval from local government officials.

Then, to make matters worse, Chinese government-owned Yuexiu Property has decided not to acquire Evergrande’s Hong Kong headquarters for $1.7 billion, further adding to the real estate developer’s liquidity problems. The dismal news were further catalyzed when yet another Chinese property developer, Sinic Holdings, defaulted on $246 million worth of bond payments that were slated for maturity on Monday.

In an effort to alleviate mounting international concerns over China’s worsening real estate crisis, the country’s central bank has weighed in on the situation, assuring markets that Evergrande’s crisis is “controllable,” and that there won’t be any negative spillover effects into the broader financial system.

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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