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Monday, September 26, 2022
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Evergrande pays bond interest ahead of deadline

bond interest

The property developer needed to make $47.5 million in coupon payments to bondholders by Friday

China Evergrande Group has made an interest payment for an offshore bond before a grace period expired on Friday, two people with direct knowledge of the matter said, narrowly averting a default for the second time in a week.

Evergrande, once China’s top-selling developer, is reeling under more than $300 billion in liabilities, fuelling concerns about the impact of its fate on the world’s second-largest economy as well as on global markets.

The property developer, which staved off a default last week by securing $83.5 million for the last-minute payment of interest on a bond, needed to make $47.5 million in coupon payments to bondholders by Friday.

A failure to pay by the Friday deadline would have triggered cross-defaults on all of the company’s $19 billion worth of bonds in international capital markets, in what would have been the world’s second-largest emerging market corporate debt default.

Certain holders of the 9.5% dollar note maturing in 2024 received notification they had been paid on Thursday, according to people with knowledge of the situation, who asked not to be identified discussing private payments. Evergrande skipped an interest payment due Sept. 29, triggering a 30-day grace period before investors could declare a default. It’s the second time this month that the debt-stricken property developer avoided default.

The latest payment to international bondholders comes amid a selloff in Chinese junk bonds that was paced on Thursday by Kaisa Group Holdings Ltd., one of the property sector’s largest issuers of dollar debt.

Evergrande pulled back from the brink of default last week by meeting another delayed coupon before that grace period ended. While that payment surprised some investors, the firm’s dollar notes remain at distressed levels as creditors brace for an eventual debt restructuring that could rank among the largest ever in China.


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