Uncertainty is rapidly on the rise for China Evergrande which has been silent on an offshore bond coupon due yesterday with mixed reports about the prospects of payment.
As of publishing, there have yet to be any updates on China Evergrande’s $83.5 million of dollar bond coupon due yesterday nor the $47.5 million coupon due next week.
Multiple bondholders reportedly claimed that they had received no payment and that Evergrande had not provided any related information.
There is a 30-day grace period to make the payment before officially deemed a default and bondholders expect more clarity before reaching this deadline.
Government Plans
Unlike previous crises, Chinese authorities have not provided clear communication about Evergrande’s future, be it a bailout, restructuring or otherwise.
A «Bloomberg» report citing unnamed sources claims that Chinese regulators asked Evergrande executives to avoid a near-term default on its dollar bonds and proactively communicate with bondholders. Local government agencies and state-owned enterprises were instructed by authorities to step in only at «the last minute», added a «Dow Jones» report citing officials familiar with the discussions.
However, a «Wall Street Journal» report, also citing unnamed officials, painted a more pessimistic outlook with Beijing reluctant to bail out Evergrande and authorities asking local governments to prepare for a «possible storm» from the property developer’s potential downfall.
Onshore Coupon
In contrast, Evergrande has been more active in resolving issues related to its domestic bonds evidenced by an agreement to settle interest payments earlier this week.
On Wednesday, Evergrande’s main unit, Hengda Real Estate Group, said it had «resolved» a coupon payment for its Shenzhen-traded 5.8 percent September 2025 bond via «private negotiations».
This also coincided with market support by the People’s Bank of China through a 90 billion yuan ($13.9 billion) injection into the financial system.
RE, EV Moves
For the time being, Evergrande has signaled the importance of resuming construction on unfinished properties belonging to 1.5 million buyers and ensuring repayment on its wealth management products.
Chairman Hui Ka Yan said the company is confident it will «walk out of its darkest moment».
Separately, Evergrande’s electric vehicle unit has reportedly missed salary payments to some employees and fallen behind on payments to suppliers for factory equipment, according to a «Bloomberg» report citing unnamed sources.
