Evergrande bondholders remained in the dark as crucial deadline approached

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Updates from the Evergrande real estate group

Investors in an Evergrande offshore bond say they have yet to receive a closely watched interest payment hours before the deadline, adding to uncertainty over an ongoing liquidity crunch at the property developer the most indebted in the world.

The $ 83.5 million payment has a deadline of midnight in New York on Thursday, or noon Friday in Hong Kong. Two people with first-hand knowledge of the case said no payment was received in Hong Kong on Friday morning.

The real estate group, which has not made a statement on the repayment, has a 30-day grace period before any payment default officially results in a payment default.

Evergrande, generally expected to default for weeks, is at the center of a storm unfolding over the health of China’s vast real estate sector as the government seeks to crack down on excessive debt.

Its woes rocked global equity and commodity markets this week ahead of the looming payment deadline, as traders weighed the implications of a slowdown in a real estate sector that has anchored China’s economic growth for decades. .

The developer, who faces total liabilities of more than $ 300 billion, warned in August of the risk of default after a rare public reprimand from Beijing. Falling debt prices have helped drive up yields in the $ 400 billion Asian high yield bond market, where it is one of the biggest borrowers.

The price of the dollar-denominated bond with interest due on Thursday slumped as investors anticipated a missed payment that would start the biggest restructuring process in China’s financial history. The note, which matures next year, is currently trading at $ 0.33 to the dollar.

Many Evergrande dollar bonds were trading around 30 cents to the dollar on Friday, signaling significant distress, while the company’s Hong Kong-listed shares fell 6.7%, causing them to fall more than 80% this year. Shares in the company’s electric vehicle subsidiary fell 22.7 percent.

“Whether or not it gets paid will not change the uncertainty,” said Michel Löwy, managing director of SC Lowy, a Hong Kong-based investment group. “[Unless there is] some form of central intervention and significant liquidity [is added] for the group, there must be a restructuring.

Evergrande injected a silver lining into Asian trading on Wednesday when it announced it had reached a deal with onshore bondholders for a separate interest payment due Thursday on a renminbi-denominated bond, without providing specific details.

The company faces other deadlines, including a $ 45 million payment due next Wednesday on a bond maturing in 2024. It has a total of around $ 20 billion in debt outstanding in international markets.

In China, Evergrande is grappling with its obligations to retail investors in wealth management products, who gathered last week at its Shenzhen headquarters to protest, as well as its commitments to suppliers and contractors in its hundreds of development projects in China.

“If foreign investors get a settlement of 10 to 15 cents above the current trading price, I think people [will] keep going, ”said a veteran Chinese debt investor, adding that authorities would likely use Evergrande to send a message to other developers.

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