New deferral of payments by Evergrande – Bankruptcy proceedings initiated by DMSA

The Chinese real estate development giant China Evergrande proceeded with a new default today, failing to pay interest payments to international investors.

The DMSA group that had invested in Chinese company bonds until the end of the grace period, today, has not received the corresponding interest payments and is therefore preparing to initiate bankruptcy proceedings against Evergrande, while inviting all Chinese bond investors colossus to participate.

China Evergrande Group, China’s second-largest real estate maker, defaulted on interest on two bonds in September, for which it had a 30-day grace period ending in October. However, shortly before the end of the grace period, the public was misled by rumors of alleged interest payments. And the international media considered the rumors true.

Only the DMSA – Deutsche Marktscreening Agentur (German Market Screening Agency) has since acknowledged default and demonstrated in its study that the bankruptcy of Evergrande, the world’s most indebted company, could eventually lead to a “Great Restoration”. “, ie in the final collapse of the global financial system.

“But while the international financial market has so far faced the financial turmoil associated with the Evergrande colossus with remarkable confidence (s.s. that it will not collapse) – one can also say – with remarkable naivety – that the central bank of the “The US Federal Reserve reaffirmed its position yesterday,” said Dr. Marco Metzler, chief analyst at DMSA.

In order to file for bankruptcy against the company as a creditor, DMSA itself invested in Evergrande bonds, the grace period of which expired today (November 10, 2021). In total, Evergrande would have to pay $ 148.13 million in interest on three bonds today at the latest. “But so far we have not received any interest on our bonds,” Metzler said.

Also, the senior analyst of DMSA, Metzler points out that the biggest problem for Evergrande is that all 23 outstanding bonds of the Chinese company have a cross-default clause. “This means that if only one of these bonds is defaulted, all 23 outstanding bonds will automatically default.”

However, this does not automatically lead to the bankruptcy of the Evergrande Group. In order to be declared bankrupt, an insolvency application must be filed in court. This can be done either by the company itself or by one or more of its creditors. And this is exactly what DMSA is planning. “DMSA is preparing bankruptcy proceedings against Evergrande. We are already in talks with other investors. We would be happy if other investors joined our action team,” Metzler said.

“Once a court starts insolvency proceedings, Evergrande will officially go bankrupt – and that is only a matter of days,” the DMSA executive concluded.