$83 million interest payment on dollar bond
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A man drives a cart past apartment buildings at China Evergrande Group’s Life in Venice real estate and tourism development in Qidong, Jiangsu province, China, on Tuesday, Sept. 21, 2021.
Getty Images Chinese property developer has not said whether it will fulfil its interest payments to investors on its U.S.-dollar bond – a key milestone investors have been keeping their eyes on.| Bloomberg | Getty Images
Chinese property developer Evergrande has not said whether it will fulfil its interest payments to investors on its U.S.-dollar bond – a key milestone investors have been keeping their eyes on.
It was due to be paid Thursday at $83 Million. The payment was made for a $2Billion dollar bond due to mature in March 2022. A majority of dollar bonds are held abroad by investors.
Foreign investors typically hold dollar bonds. As of Friday morning Asia time, there had been no announcement or filing by the Hong Kong stock exchange. Investors were left in the dark.
The yields of this bond are now at more than 560% after being just 10% this year according to Refinitiv Eikon. The yields of bonds and the prices go in opposite directions.
Although no payments are made Thursday, technically the company is not in default unless they fail to make it within 30 days.
The indebted real estate firm has another coupon payment due next Wednesday – a 7-year U.S. dollar-denominated bond maturing in March 2024, according to Refinitiv Eikon data.
Evergrande will continue to pay interest each month for the remainder of the year. These payments are due in December, October and November.
The troubles of Evergrande, the world’s most indebted developer with liabilities of $300 billion, have escalated in recent weeks and roiled global markets. China’s 2nd-largest developers by sales. The company has an extensive presence in China, with a variety of interests.
Evergrande has warned it may default on its debt. The developments are being closely monitored by investors, who fear contagion could reach other markets.
Analysts had largely expected the beleaguered property giant to miss its coupon payment on Thursday. S&P Global said earlier this week a default was “likely.”
The market was slightly calmed by Evergrande’s assurance that it will pay its interest on the mainland-traded and yuan denominated bond due Thursday.
According to Reuters Evergrande’s chairman said to company executives that it would deliver properties to owners and assist retail investors in redeeming their wealth management products.
But analysts have said the firm may prioritize domestic investors, who are the main holders of onshore bonds – over foreign investors, who mostly hold the offshore debt.
Following protests from angry investors and homeowners in recent weeks, the government wants to stop social unrest.
Last week, around 100 investors turned up at Evergrande’s headquarters in Shenzhen, demanding repayment of loans on overdue financial products, according to Reuters.
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