Evergrande has yet to pay interest on bonds to investors, sources say

Some holders of offshore (foreign) debt securities issued by a unit of the developer China Evergrande Group did not receive interest payments due on November 6th until the evening of Monday (8) on Asia, said two people familiar with the matter.

Scenery Journey was supposed to make semi-annual coupon payments on Saturday in the combined amount of $82.49 million for its US dollar bonds of 13% in November 2022 and 13.75% in November 2023.

Failure to pay interest by November 6th would result in a 30-day grace period for payment.

Evergrande has already avoided catastrophic defaults twice in October by placing its bonds in international capital markets worth a total of $19 billion, paying coupons before their grace periods expire.

One of those deadlines expires on Wednesday (10) for more than $148 million in coupon payments due on October 11th.

The company is also expected to make coupon payments totaling more than $255 million on its June 2023 and 2025 bonds on December 28th.

An Evergrande spokesman did not immediately respond to a request for comment. The sources could not be named because they were not authorized to speak to the media.

Reuters has been unable to determine whether Evergrande has told bondholders what it plans to do regarding payment of coupons due on Saturday.

Evergrande Bonds and Shares Down

As actions of Evergrande fell on Monday, ending the day with a drop of 0.9%. They retreat almost 85% this year.

Duration Finance data showed that the company’s dollar bonds continued to trade at discounts of about 75% off their face value on Monday.

Formerly the developer that sold the most in the China, Evergrande has rebounded from more than $300 billion in debt liabilities, and its liquidity problems have rippled through the country’s $5 trillion real estate industry, leading to a string of offshore debt defaults, credit rating downgrades. and settlements in stocks and bonds of developers in recent weeks.

Spreads on Chinese high-yield dollar corporate debt widened to record levels on Friday (5), and on Monday, data from the Shanghai Stock Exchange showed that developers’ bonds once again dominated the list. of the biggest losers of the day.

A renminbi bond issued by a Shimao Group unit was suspended from trading after falling more than 34%.

The declines even extended to highly investment-grade names. Tradeweb data showed that a 4.75% bond for January 2030 issued by a unit of Sino-Ocean Group Holding fell nearly 15% on Monday, to just over 75 cents.

Sino-Ocean is rated “BBB-” by Fitch Ratings and has a rating of “Baa3” by Moody’s Investors Service.

Nomura economists Ting Lu and Jing Wang said in a note that they expected “much higher” repayment pressures on incorporated companies in coming quarters, nearly doubling from $10.2 billion in the fourth quarter of 2021 to $19, 8 billion and $18.5 billion in the first and second quarters of 2022, respectively.

“With the worsening situation in the real estate sector, we may see a return of onshore defaults by developers, and bond prices in the onshore and offshore markets can increasingly impact each other, as investors are on alert.” they said.

“We believe regulators are likely to step up efforts to prevent further delinquencies in the China market (in offshore US dollar-denominated bonds).”

In October, regulators told developers to proactively prepare for the payment of their foreign bonds and interest and “jointly maintain their own reputations and general market order.”