Business Maverick

Business Maverick

Evergrande investors say they’re yet to get USD bond coupon

Pedestrians walk over a bridge displaying the latest stock market figures in financial district of Shanghai, China, 21 February 2021. (Photo: EPA-EFE/ALEX PLAVEVSKI)

Two holders of a China Evergrande Group dollar bond with a coupon due Wednesday said they hadn’t received payment as of 8:00 a.m. Hong Kong time Thursday. 

Evergrande owes $45.2 million in interest on the note due 2024, according to data compiled by Bloomberg. There’s a 30-day grace period before any default could be declared. Bloomberg News spoke to two other investors that said they had yet to receive payment as of 9:30 p.m. Hong Kong time Wednesday. All four bondholders asked not to be identified because the matter is private.

The world’s most indebted developer gave no signs last week of having met a separate $83.5 million coupon payment on other dollar securities. Fitch Ratings cut the developer’s credit ratings even further into junk Wednesday given Evergrande is “likely to have missed interest payment” on that note.

There was no immediate response from Evergrande to an emailed request for comment sent after business hours.

A payment failure would bring the debt-laden developer one step closer to what would be one of the country’s biggest restructurings. Investors are watching Evergrande closely as its deepening debt crisis weighs on broader financial markets. Stress at the firm has spurred yields on China’s junk-rated corporate dollar debt to about 15%, the highest in a decade.

Some holders of a bond issued by a company called Jumbo Fortune Enterprises are forming a committee to press their claims in the event of a default because they maintain China Evergrande Group is a guarantor of the debt, Bloomberg reported Tuesday.

China’s housing regulator has stepped up oversight of Evergrande’s bank accounts to ensure funds are used to complete housing projects and not diverted to pay creditors. At the same time, financial regulators in Beijing issued a broad set of instructions to the developer to focus on completing unfinished properties and repaying individual investors while avoiding a near-term default on dollar bonds.

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