Chinese private real estate developer Evergrande, which is on the verge of default, failed to properly pay interest on dollar bonds scheduled to be paid on the 29th following the 23rd.
According to Reuters on the 30th, holders of Evergrande dollar bonds due in 2024, which are scheduled to pay $47.5 million in interest on the 20th, have not been contacted by Evergrande.
While Evergrande did not make an official position, the prevailing view in the market is that Evergrande eventually failed to properly pay interest to investors on the 29th.
Earlier on the 23rd, Evergrande reportedly did not pay $83.5 million in dollar bonds to bondholders.
However, even if interest payments are not made on the scheduled date, the bonds do not yet consider Evergrande to have made an official technical default due to a 30-day grace period.
Evergrande announced in a public announcement on the 29th that it has signed a contract to sell a 19.93% stake in Shengjing Bank for 9.993 billion yuan.
The market expected Evergrande’s liquidity crisis to ease somewhat, but the full amount of funds secured by the sale of Shengjing Bank’s stake was used to repay loans received from Shengjing Bank, which consequently did not help solve the bond interest repayment problem.
As such, Evergrande default crisis is still underway, but some observers say that the Chinese authorities have expressed their willingness to manage the Hengda crisis in the wake of state-owned companies’ acquisition of shares in Shengjing Bank.
“The most probable result is debt adjustment with government support,” said Y Hung Rung, head of Asia Pacific Bond ETF at Crane Share, adding, “The government and Evergrande expect to focus on protecting customers and partners.”
Market watchers predict that Evergrande will try to secure funds by disposing of non-core assets such as Evergrande Motors following Shengjing Bank.
The Chinese government has yet to show a clear attitude as to whether to actively intervene in the Evergrande crisis or leave Evergrande bankrupt while leaving it to the market, but is expressing its willingness to prevent uncontrollable confusion.
Liu He, deputy prime minister of the State Council, who is President Xi Jinping’s “economic bookkeeper,” said in a congratulatory speech at the World Internet Conference in Hangzhou, Zhejiang Province, on the 26th, “The Chinese macroeconomy is stable overall and has the experience of managing and controlling risks, so the prospects for development are very bright.”