Evergrande Narrowly Averts Default Again, Makes Last Minute Interest Payment

The fate of China’s most indebted property developer Evergrande was hanging on its last thread once again, after the company narrowly made a last-minute interest payment at the end of the day Wednesday.

International clearing company Clearstream reported on Wednesday evening that Evergrande made $148.1 million in delinquent interest payments on its dollar-denominated coupons, including a 9.5% bond due 2022, a 10% note due 2023, and another 10.5% note due 2024. The news was later corroborated by two bond holders who had received payment from the Chinese company, as cited by Bloomberg.

Investors were anticipating Evergrande would officially default on Wednesday, after the embattled real estate developer failed to initially make the interest payments before the 30-day deadline last month. The Chinese company suffered a similar fate in October, when it made a coupon payment at the eleventh hour, narrowly missing the end of the grace period.

However, the nightmare that is Evergrade is far from over, as the real estate developer continues to stumble its way from one grace period to the next, still facing over $300 billion in debt of which $19 billion is in overseas bonds. As Bloomberg reports, two international bondholders said they didn’t receive interest payments on coupons due Saturday, effectively triggering yet another 30-day grace period before a default can officially be declared.

In the meantime, the Chinese government has been attempting to mitigate the country’s real estate fallout, with the central bank unleashing additional liquidity into the country’s financial system. Bonds and stocks of Chinese property developers were sent into a rally on Wednesday, after the Securities Times reported that regulators are mulling loosening restrictions on real estate companies’ borrowing in an effort to avert a further financial contagion.

Information for this briefing was found via Bloomberg and the companies mentioned. 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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