A man walks past the apartment buildings of the Life of China Evergrande group at the Venice Real Estate and Tourism Development in Qidong, Jiangsu province, China on Tuesday, September 21, 2021.
Kilai Shen | Bloomberg | Getty Images
Chinese real estate developer Evergrande has not said whether it will honor its interest payments to investors on its U.S. dollar bonds – an important step investors are considering.
The interest payment due Thursday was $ 83 million. It was a $ 2 billion bond that was due to mature in March 2022. Dollar bonds are typically held by foreign investors.
On Friday morning, during business hours in Asia, the company had made no announcements or deposits on the Hong Kong Stock Exchange, leaving investors in limbo.
According to Refinitiv Eikon, the yield on this bond has risen from just 10% earlier this year to over 560%. Bond yields and prices move in opposite directions.
Even if no payment is made on Thursday, the company will not technically be in default unless it has not made payment within 30 days.
The indebted real estate company has another coupon payment due next Wednesday – a 7-year U.S. dollar-denominated bond maturing in March 2024, according to data from Refinitiv Eikon.
For the rest of the year, Evergrande pays interest each month in October, November, and December.
The problems of Evergrande, the world’s most indebted developer with $ 300 billion in liabilities, have intensified in recent weeks and have stirred global markets. The company is China’s second-largest developer in terms of sales and has a strong presence in the country, serving a wide range of industries.
Evergrande warns he could default on his debt. Investors are watching developments closely amid fears of a spread to other markets.
Analysts widely expected the struggling asset giant to default His payment slip on Thursday. S&P Global said earlier this week that a default was “likely”.
Evergrande assured investors on Wednesday that market sentiment had calmed somewhat that it would honor its interest payments on mainland-traded, yuan-denominated bonds due Thursday.
The president of Evergrande on Wednesday asked company executives in an overnight meeting to ensure properties are delivered to owners and to help retail investors capitalize on their wealth management products, according to Reuters . .
But analysts said the company may prefer domestic investors, who are the main holders of onshore bonds, to foreign investors, who mainly hold offshore debt.
The government will be eager to quell social unrest after protests from angry buyers and investors in some cities in recent weeks.
Nearly 100 investors flocked to Evergrande’s headquarters in Shenzhen last week, according to Reuters, seeking to repay loans on overdue financial products.