Friday October 22, 2021
Interest due paid before deadline
Evergrande pulls his head out of the loop again
Shortly before the end of the 30-day payment period, the heavily indebted Chinese real estate company Evergrande gains some breathing space by paying interest on a bond. Had Evergrande not been able to raise the money on time, a formal default on payment would have been the result.
The China Evergrande Group has made an overdue interest payment to international bondholders, the state Securities Times reported – an unexpected move that enables the real estate company to avert default.
The Chinese real estate developer on Thursday transferred $ 83.5 million to the trustee for the US dollar bonds and that financial institution will pay the bondholders in return, the Securities Times reported. The financial newspaper is published by the Communist Party’s flagship, People’s Daily.
Evergrande was nearing the end of the 30-day payment period before bondholders could send the company notice of default. Evergrande failed to make interest payments on dollar bonds worth approximately $ 2.03 billion on September 23. A default on these bonds would likely have turned into the largest corporate bankruptcy in Asia, as it would have given creditors the option to default on some of Evergrande’s other debts.
Many bondholders did not believe in payment
The company is one of the largest property developers in China and at the same time the most heavily indebted. At the end of June, its total debt was the equivalent of more than $ 300 billion, including approximately $ 89 billion in interest payable. Many international bondholders had anticipated that Evergrande would not make the coupon payments on its dollar bonds before the deadline.
The company has also skipped other coupon payments in the past few weeks and has approximately $ 20 billion in outstanding dollar debt. Advisors to international bondholders said earlier this month that they had made little progress in their talks with Evergrande.