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Coupon Payment Made; China Downplays Risk: Evergrande Update

Residential buildings stand in the Taiyanggong area of Beijing, China, on Monday, April 16, 2018. New home prices in Beijing and Shanghai have jump more than 25 percent over the last two years. Photographer: Giulia Marchi/Bloomberg
By Bloomberg
22 Oct 2021 0

China Evergrande Group made an interest payment on a dollar bond ahead of a Saturday deadline, according to a report in the Securities Times, sending the embattled developer’s stock and bonds higher.

Evergrande transferred an $83.5 million coupon payment within the 30-day grace period, the paper reported, citing “relevant channels”. The bond had been trading as low as 23 cents on the dollar on expectations of a looming default after the company missed the initial payment due Sept. 23.Evergrande’s stock jumped as much as 7.8% in Hong Kong to HK$2.78, paring this year’s loss to 82%. The firm’s 8.25% note maturing in March jumped 1.3 cents on the dollar to 25.7 cents as of 10:31 a.m.

The payment offers some temporary relief for Evergrande, giving it more time to sell assets and raise cash to pay creditors and suppliers. The reprieve may be short-lived however, with more than $300 billion in liabilities still to be paid, analysts said.

“We have seen this before – one bond repayment does not solve the company’s problem and does not change the fact that it is the living dead,” said Justin Tang, head of Asian research at United First Partners in Singapore.

China’s banking regulator meanwhile dismissed concerns that the crisis enveloping Evergrande will have any major impact on the the sector as a whole, even as shares of the developer nosedived on Thursday.

Evergrande is an “individual” case, Liu Zhongrui, an official at the China Banking and Insurance Regulatory Commission, said at a briefing in Beijing.

 

Evergrande share prices resume decline as sale talk ends

Key Developments:

China Vows to Keep Property Curbs, Evergrande Risk Seen Limited

Evergrande Shares Offer ‘No Value’ Without Cash Infusion: UFP

Evergrande Secures Extension on Jumbo Fortune Bond: REDD

Morgan Stanley Team Turns Bullish China HY, Says Prices Too Low

China Property Easing Bodes Well for Developer Bonds: Goldman

Evergrande Shares Offer ‘No Value’ Without Cash Infusion: UFP

Modern Land China Halted in Hong Kong Pending Inside Information

Kaisa Bonds Fall After Investor Meetings Canceled This Week (1)

Evergrande Ends Talks for Cash-Infusing Sale of Management Arm

 

Evergrande Pays Bond Interest Due Saturday: Local Media (9:40 a.m HK)

Evergrande has transfered interest on a dollar bond before the end of a closely watched grace period, local media reported, in what would be a respite for the developer amid a debt crisis that’s shaken the nation’s credit market.

The property giant wired the $83.5 million payment and noteholders will receive it before Saturday, state-backed newspaper Securities Times said, citing relevant channels.

Evergrande’s dollar bonds were indicated up as much as 3 cents on the dollar after the report, according to credit traders. Its shares rose in Hong Kong.

Coming Due

Princeling’s Surprise Default Roils Global Investors (7:45 a.m. HK)

Zeng Jie’s uncle was once China’s vice president. Her grandfather served as Mao Zedong’s minister of internal affairs.

Now the 50-year-old “princeling” — a term that refers to the descendants of powerful Communist Party founding members — is gaining renown of her own as a central figure in the turmoil rippling through China’s real estate sector.

While her Fantasia Holdings Group is small relative to troubled giant China Evergrande Group, its shock failure to repay a $205.7 million bond earlier this month spurred a dramatic selloff in the offshore market, with some investors taking it as a harbinger of a worsening liquidity crisis for China’s heavily leveraged property firms.

 

Fantasia's bonds plunge after the company defaulted on an October note

Offshore Creditors May Seek Talks After Grace Period (1:20 p.m. NY)

Offshore creditors to Evergrande may seek a standstill and debt talks with the firm if it fails to make an interest payment by a Saturday grace period deadline, according to people with knowledge of the matter.

Bondholders, some of whom are getting advice from Kirkland & Ellis and Moelis & Co., aren’t planning to demand immediate repayment after the deadline in hopes that the company will come to the table to discuss options for the missed payment, said the people, who asked not to be identified discussing confidential matters.

Evergrande has now met the deadline, according to a report in the Securities Times.

Hopson: Evergrande’s Requests to Change Terms Unacceptable (Noon NY)

Hopson Development says Evergrande requested substantial changes to an agreement on the sale of a stake in its property-management arm after it was signed, including terms of payment, according to a filing to the Hong Kong stock exchange.

China Vows to Keep Property Curbs; Evergrande Risk Limited (4:25 p.m. HK)

China’s banking regulator vowed to keep its curbs on the nation’s property market, dismissing concerns that the crisis enveloping Evergrande will have any major impact on the credit profile of the sector as a whole.

The property controls have achieved good results and the government will refrain from using the real estate sector as a short-term economic stimulus measure, Liu Zhongrui, an official at the China Banking and Insurance Regulatory Commission, said at a briefing in Beijing on Thursday. Evergrande is an “individual” case and won’t hurt the overall credibility of Chinese firms, which is backed by the country’s economic stability, he said.

China Property Purge Hammers Weak Players While the Strong Gain (4:07 p.m. HK)

China’s property sector is undergoing its biggest credit-market shakeout in years as policy makers try to clamp down on over-indebted developers without infecting their healthier rivals.

Companies with the worst balance sheets are getting crushed by a spike in borrowing costs, a phenomenon that’s intensifying this month as bills come due. At least three Chinese developers have defaulted in October, one may struggle to pay interest due Friday and another failed to get a three-month extension for a note maturing Monday.

Evergrande Secures Extension on Jumbo Fortune Bond: REDD (1:15 p.m. HK)

Evergrande has secured agreement for an extension of more than three months on a $260 million bond issued by Jumbo Fortune and guaranteed by the developer, according to a REDD report citing two sources briefed by the bondholders. The agreement was reached earlier this week after Evergrande agreed to provide extra collateral and the developer will seek the Guangdong government’s opinion before making the delayed dollar coupon payments, the report said without identifying the source of the information.

Evergrande deadlines:

Dollar bonds Coupon due date Amount

(million dollars)

EVERRE 8.25% due 2022 Sept. 23 83.53
EVERRE 9.5% due 2024 Sept. 29 45.17
EVERRE 9.5% due 2022 Oct. 11 68.88
EVERRE 10% due 2023 Oct. 11 42.5
EVERRE 10.5% due 2024 Oct. 11 36.75
TIANHL 13% due 2022 Nov. 6 41.93
TIANHL 13.75% due 2023 Nov. 6 40.56

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