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Investors brace for rough ride as Evergrande faces payment deadline By Reuters


© Reuters. China Evergrande Group headquarters in Shenzhen (Guangdong province), China, September 26th, 2021 is under surveillance by police and security officers. REUTERS/Aly Song

HONG KONG (Reuters) – Investors were bracing for potential market turbulence on Wednesday as a bond coupon payment for China Evergrande Group comes due, giving the embattled property developer its next test in public markets.

Evergrande was once the center of China’s bustling building boom. However, Evergrande is now the subject of a clampdown on developers’ loans that has sparked volatility in global markets. Investors large and small are both worried about their exposure.

Due Wednesday is the $47.5million bond interest payment to Evergrande on its 9.5% February 2024 dollar bond. Although it doesn’t have any additional offshore or onshore bonds that are due this year, it will still need to make coupon payments totaling $547.57million for its offshore bonds.

Evergrande’s woes shook global stock markets early this month.

Some global investors have now shifted to Washington political wrangling over the U.S. Debt Ceiling and the rise in Treasury yields, which has impacted stocks. ()

Stock market bulls could be given more ammunition if Evergrande’s negative surprises are not expected.

Evergrande, with liabilities totalling $305 billion has raised concerns that its problems might spread to China’s financial systems and cause havoc around the globe. However, this worry has been lessened as the damage done so far has been concentrated in property.

China’s central banking vowed Monday to help consumers who were exposed to the property market. It also injected additional cash into its financial system. Evergrande’s wealth-management unit was under investigation by the Shenzhen government, which is the most clear sign that authorities are attempting to limit contagion risk.

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