Evergrande misses 3rd round of bond coupon payments, intensifying contagion fears

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Some bondholders said they had not received coupon payments totaling $148 million on Evergrande’s notes for April 2022, April 2023 and April 2024.

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HONG KONG – China Evergrande Group missed its third round of bond payments in three weeks on Tuesday, raising market fears involving other property developers as a wall of debt payment obligations approaches in the near term.

Some bondholders said they did not receive coupon payments totaling $148 million on Evergrande’s notes for April 2022, April 2023 and April 2024, which were due at 0400 GMT on Tuesday, following two other payments in September.

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This puts investors at risk of major losses at the end of the 30-day grace period as the developer wrestles with more than $300 billion in liabilities.

Beyond Evergrande, China’s property market faces a $5 trillion reckoning

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Evergrande did not immediately respond to a request for comment.

A total of $101.2 billion in bonds issued by Chinese developers will be due next year, Refinitiv data shows.

“If the liquidity problem does not improve, we see more defaults ahead,” brokerage CGS-CIMB said in a note. Developers with weak credit ratings are currently finding it difficult to refinance.

High-yield bond trading remained soft on Tuesday after a rout in the previous session on fears about a rapidly spreading infection in the $5 trillion region, which accounts for a quarter of the Chinese economy and is often a key figure in policymaking. factor.

Data from the Shanghai Stock Exchange showed that the top five losers among exchange-traded bonds in morning deals were all issued by property firms.

Smaller developers Modern Land and Cynic Holdings were at the latest scrambling to delay deadlines, having missed payments from Evergrande and Fantasia since September.

Modern Land’s dollar bond fell 25% to 32.250 cents on the dollar due 2023, while Cynic’s bond rose 12% to 19.35 cents due in 2022, up more than 1380%.

Evergrande says six executives have refunded money from advance redemption of products

Modern Land, whose shares fell more than 3% on Tuesday to new lows, on Monday urged bondholders to delay repayments due to the end of this month by three months, while Cynic said it would do so next week. Likely to be the default.

Ouyuan’s bonds declined by 3.5% due to 2025, while Sunak’s 2024 bonds declined 2.6%.

On Monday, the unit of Fantasia Holdings conducted limited trading in its Shanghai bonds, which are often preceded by defaults.

Comprehensive result?

While there has been a global focus on missed dollar loan payments by Chinese asset issuers, market indicators suggested concerns about the contagion and a slowing economy were spreading further.

Market players say the sell-off, however, is limited to high-risk bond names.

Michael Wong, director of Hong Kong-based CP Securities, said, “The market is now trading more rationally according to individual quality and rating of companies, rather than selling across sectors.”

The cost of insurance against China’s sovereign default continued to rise on Tuesday with the 5-year credit default swap – which investors commonly use as a hedge against increased risk – at its highest point since April 2020.

Options-adjusted spreads on the ICE BofA Asian Dollar High Yield Corporate China Issuers Index returned to 2,061 basis points on Monday evening US time, just below its previous all-time high of 2,069 basis points on Friday.

However, shares of several other property firms outperformed, as markets bet on further loosening policies following measures in the northeastern city of Harbin to support property developers and their projects.

Top developers Country Garden and Sanac China both grew 2%.

Evergrande’s electric vehicle unit jumped more than 10% after vowing to start producing cars next year.


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