Investors brace for rough ride as Evergrande faces payment deadline

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Police and security personnel keep a watch outside the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China on September 26, 2021. Businesshala/Allie Song
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HONG KONG (Businesshala) – Investors prepared for potential market turmoil on Wednesday as a bond coupon payment for China Evergrande Group is due, giving the embattled property developer its next trial in the public markets.

Once the face of China’s frenzied construction boom, Evergrande has now become the face of a crackdown on developers’ loans, which has fueled volatility in global markets and left investors big and small sweating their exposure.

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The company is scheduled to make $47.5 million bond interest payments on its 9.5% March 2024 bond on Wednesday. Although it has no more onshore or offshore bonds maturing this year, it must make coupon payments by December 28 for a total of $547.57 million in offshore bonds.

Evergrande’s troubles rattled global stock markets earlier this month.

In the weeks that followed, some global investors have turned their attention to the political wrangling in Washington over an increase in US debt limits and Treasury yields, which have put pressure on stocks. [.N]

Any negative surprises from Evergrande could give the stock market more ammunition.

With $305 billion in liabilities, Evergrande has raised concerns that its problems could spread through China’s financial system and reverberate around the world – a concern that has lessened as losses have so far been concentrated in the property sector. .

On Monday, China’s central bank vowed to protect consumers exposed to the housing market and pour more cash into the banking system. The Shenzhen government has opened an investigation into Evergrande’s asset management unit, a clear sign that authorities may yet move to control the risk of infection.

Writing by Ira Iosebashvili; Editing by Sonya Hepinstall


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