China Evergrande bondholders brace for Monday’s coupon deadline

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SHANGHAI, Oct 11 (Businesshala) – Offshore bondholders of beleaguered developer China Evergrande Group were prepared on Monday for news of more than $148 million in bond coupon payments after the company missed two coupon deadlines last month.

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The company is expected to make semi-annual payments on October 11, April 2022, April 2023 and April 2024 notes, as it prioritizes onshore creditors and remains silent on its dollar debt obligations.

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This has left offshore investors concerned about the risk of major losses at the end of the 30-day grace period as the developer wrestles with more than $300 billion in liabilities.

Evergrande’s troubles have rattled global markets and the firm has already missed payments on dollar bonds, which are due on September 23 and 29, worth a combined $131 million.

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Advisors to offshore bondholders said Friday they want more information and transparency from a cash-strapped property developer.

Offshore bondholders are seeking more information about Evergrande’s plan to split some of the businesses and how the proceeds will be used, the advisors said.

Trading in shares of Evergrande, as well as its Evergrande Property Services Group unit, has been halted since October 4, pending the announcement of a major deal. On Monday, the company’s electric vehicle unit swung between big losses and gains, falling as much as 4.65% and rising as much as 9.28%.

Evergrande contagion concerns affecting the broader Chinese property sector spilled over into a massive sell-off of Chinese high-yield dollar debt last week, especially after smaller developer Fantasia Holdings Group Co. had a $206 million international market debt payment deadline on October 4. Missed.

The options-adjusted spread on the ICE BofA Asian Dollar High Yield Corporate China Issuers Index was last recorded at 2,069 basis points on Friday evening US time, the highest ever.

Fantasia Group China Co said on Monday it would adjust the trading mechanism of its Shanghai-traded bonds following a credit downgrade by the China Chengxin International Credit Rating Company (CCXI), and said its parent has worked to resolve liquidity problems. An emergency group was formed for

The move comes after the Shanghai Stock Exchange halted trading of two exchange-traded bonds of Fantasia Group on Friday after a sharp drop, and echoes a similar adjustment in Evergrande’s onshore bond trading last month.

Kenneth Ho, Head of Asia Credit Strategy at Goldman Sachs, said: “We believe policymakers have zero tolerance for systemic risk and aim to maintain a stable asset market, and if asset activity levels decline. If it gets worse, policy support may be forthcoming.” .

“That said, we also believe that policymakers do not want to over-stimulus, and that their long-term goal is to decouple the asset sector. Finding the right balance may take longer, and the uncertainty of China assets (high-yield).” The market is likely to be a constant source of volatility.

Reporting by Andrew Galbraith Editing by Mr Navratnam


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