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Evergrande shares swing on bond interest payment concerns


The company’s shares rose 5.21% before reversing course to slump 7.17%

Shares of debt-laden China Evergrande Group swung wildly on Thursday as the company looked set to miss its second bond interest payment in a week, as an additional $180 million in coupon deadlines loom in the next month.

The company’s shares opened sharply higher, rising as much as 5.21% before reversing course to slump as much as 7.17%. Evergrande Property Services Group dropped 4.2% before trimming losses to 0.6% and China Evergrande New Energy Vehicle Group slumped as much as 19.4%. It last traded down 8.6%.

With liabilities of $305 billion, Evergrande has sparked concerns its woes could spread through China’s financial system and reverberate around the world, a worry that has eased with the Chinese central bank vowing to protect homebuyers.

Once China’s top-selling developer and now expected to be the subject of one of the largest-ever restructurings in the country, Evergrande has been prioritising domestic creditors over offshore bondholders.

While its main unit, Hengda Real Estate Group, announced a resolution of an onshore bond coupon payment on Sept. 23 through “private negotiations”, Evergrande has been silent about its offshore payment obligations.

Regardless of how the debt is restructured, Evergrande shareholders and investors in offshore, USD-denominated corporate bonds will suffer large losses, said Jing Sima, chief China strategist at BCA Research in a note.

Evergrande, which has nearly $20 billion in offshore debt, also missed a $83.5 million coupon payment on another bond last Thursday.

The Sept. 23 and Sept. 29 coupon payments have 30-day grace periods.

The company faces deadlines on offshore coupon payments totalling $162.38 million and an onshore coupon payment of 121.8 million yuan ($18.84 million) by Oct. 30.

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