China Evergrande shares swing as bondholders await word on payments

September 30, 2021

By Anne Marie Roantree and Andrew Galbraith

HONG KONG/SHANGHAI (Reuters) – Shares of debt-laden China Evergrande Group swung wildly on Thursday as the company looked set to miss its second bond interest payment in a week, as an additional $180 million in coupon deadlines loom in the next month.

The company’s shares opened sharply higher, rising as much as 5.21% before reversing course to slump as much as 7.17%. Evergrande Property Services Group fell 4.2% before trimming losses to 0.6% and China Evergrande New Energy Vehicle Group dived as much as 19.4%. It last traded down 8.6%.

An offshore bondholder, who declined to be named because of the sensitivity of the matter, said his firm had received no information from Evergrande about the $47.5 million semi-annual bond interest payment on its 9.5% March 2024 dollar bond as of Thursday morning in Asia.

The coupon payment was due Sept. 29. It was not immediately clear whether the payment could still be made during U.S. hours.

With liabilities of $305 billion, Evergrande has sparked concerns its woes could spread through China’s financial system and reverberate around the world – a worry that has eased with the Chinese central bank vowing to protect homebuyers.

Once China’s top-selling developer and now expected to be the subject of one of the largest-ever restructurings in the country, Evergrande has been prioritising domestic creditors over offshore bondholders.

While its main unit, Hengda Real Estate Group, announced a resolution of an onshore bond coupon payment on Sept. 23 through “private negotiations”, Evergrande has been silent about its offshore payment obligations.

“Regardless of how the debt is restructured, Evergrande shareholders and investors in offshore, USD-denominated corporate bonds will suffer large losses,” said Jing Sima, chief China strategist at BCA Research in a note.

Evergrande, which has nearly $20 billion in offshore debt, also missed a $83.5 million coupon payment on another bond last Thursday.

The Sept. 23 and Sept. 29 coupon payments have 30-day grace periods.

The company faces deadlines on offshore coupon payments totalling $162.38 million and an onshore coupon payment of 121.8 million yuan ($18.84 million) by Oct. 30.

($1 = 6.4641 Chinese yuan)

(Reporting by Anne Marie Roantree in Hong Kong and Andrew Galbraith in Shanghai; Editing by Christopher Cushing and Gerry Doyle)

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