Evergrande faces default deadline on $148 million payment, some bondholders paid-report

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SHANGHAI/HONG KONG (Businesshala) – Cash-strapped China Evergrande Group, facing a coupon payment deadline on Wednesday, may have made those payments, according to a Businesshala report that said International clearing firm Clearstream’s clients have received an overdue payment. on three US dollar bonds.

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Evergrande, the world’s most indebted developer that once epitomized a free era of borrowing and construction, has been stumbling from deadline to deadline in recent weeks as it grapples with more than $300 billion in liabilities. of which $19 billion is international market bonds.

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The company has not defaulted on any of its offshore debt obligations. But the 30-day grace period on coupon payments of more than $148 million on April 2022, 2023 and 2024 bonds expires Wednesday.

Failure to make payments would result in a formal default by the company and trigger cross-default provisions for other Evergrande dollar bonds, adding to the debt crisis on the world’s second-largest economy.

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Businesshala reported that Clearstream clients received overdue payments on three US$ bonds, citing a Clearstream spokesperson and bondholders of two bonds that said they received payments. Clearstream did not immediately respond to a request for comment.

It is unclear when the exemption period ends on Wednesday, but two sources with knowledge of the matter previously told Businesshala that some bondholders had not been paid until the end of the Asian trading day. He declined to be named as he was not authorized to speak to the media.

Evergrande declined to comment.

For its two separate offshore coupon payment obligations, which were due at the end of September, the developer’s bondholders did not receive payment until one business day after the 30-day grace period ended.

Carl Clorie, restructuring advisor and partner at Edleshaw Goddard LLP, said “hopefully it will be paid off,” pointing to a possible easing in the weeks preceding the so-called three red line-financial requirements introduced by the central bank. Last year developers must meet to get new bank loans.

FILE PHOTO: Guangzhou Evergrande soccer stadium, a new stadium for Guangzhou FC, rides an electric bicycle in Guangzhou, Guangdong province, China September 26, 2021. Businesshala/Allie Song/File photo

“It would be quite surprising if funds do not flow to the trustee in the expected time frame, given the immediate cross-default and ripple effects on suppliers and the wider People’s Republic of China real estate market.”

Evergrande’s problems add to concerns about a lack of liquidity in the asset sector. It also has coupon payments on its June 2023 and 2025 bonds due on December 28, totaling more than $255 million.

China’s asset crisis nL4N2RI1AS rocked the global markets in September and October. There was a brief lull in mid-October when Beijing tried to reassure markets that the crisis would not be allowed to spiral out of control.

But concerns have resurfaced, with the US Federal Reserve warning on Tuesday that China’s asset sector could pose a global risk.

More developers are seeing their credit ratings come down on their deteriorating financial profile.

Moody’s Investors Service on Wednesday downgraded Cassa Group, which made a desperate plea for help here on Tuesday, citing liquidity risks, limited financial flexibility and weak recovery prospects for its creditors.

How does it have the most offshore debt of any Chinese developer after Evergrande? The developer has a coupon payment of more than $59 million on Thursday and Friday.

S&P Global Ratings separately said it had downgraded Shimao Group Holdings’ rating from “BBB-” to “BB+” over concerns that difficult business conditions could hinder the company’s efforts to reduce its debt. Huh.

S&P considers a rating under “BBB-” to be a speculative grade.

Concerns over Evergrande’s potential repercussions have also slammed the bonds of Chinese real estate companies here.

Shares of developer Fantasia Holdings fell 50% on Wednesday after it said there was no guarantee it would be able to meet its other financial obligations after a $205.7 million defaulted payment on October 4.

Reporting by Andrew Galbraith in Shanghai and Claire Jim in Hong Kong; Additional reporting by Karin Strohecker in London and Jessica Dinapoli and Megan Davis in New York; Written by Sumeet Chatterjee; Editing by Stephen Coates, Lincoln Feast, Amelia Sithole-Mataris, Nick McPhee and Richard Pullin

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