Investors are watching closely whether Evergrande can make Saturday's deadline of $110 million in interest payments.Ī further $60 million interest payment was missed on September 29 and the grace period is also expiring on those debts. So how is this likely to play out in the coming days? What happens next if a formal default occurs? Will Evergrande formally default without a bailout? Loading. Once a darling of China's booming property sector, Evergande is now at risk of the country's largest-ever corporate default with more than $400 billion in debts, triggering financial woes in the world's second-biggest economy. The 30-day grace period for an offshore bond payment that the company initially missed on September 23 is going to expire at the end of this week. The stock ended down 0.4%.After weeks of radio silence since being suspended from trading on the Hong Kong Stock Exchange, Chinese property giant Evergrande is about to face its day of reckoning. Mainland China's stock and bond markets, foreign exchange and commodity futures markets, which were closed Monday and Tuesday for Mid-Autumn Festival, resume trade on Wednesday, but Hong Kong's financial markets will be closed for a public holiday.Įvergrande's shares fell as much as 7% on Tuesday, having tumbled 10% in the previous day, on fears its $305 billion in debt could trigger widespread losses in China's financial system in the event of a collapse. In an effort to revive battered confidence in the firm, Evergrande 3333.HK Chairman Hui Ka Yuan said in a letter to staff that Evergrande will fulfil responsibilities to property buyers, investors, partners and financial institutions. She declined to comment on Evergrande's scheduled payments. "We do not have any direct lending exposure to Evergrande our indirect exposure through counterparty credit risk is small and with no single significant concentration ," Citigroup spokesperson Danielle Romero-Apsilos said in an email on Tuesday. Rowe Price Emerging Markets Bond fund, who does not have a position in the company.īNP Paribas estimated in a research note that less than $50 billion of Evergrande’s $300 billion outstanding debt is financed by bank loans, suggesting the Chinese banking sector will have a sufficient buffer to absorb potential bad debts.Ĭitigroup Inc C.N subsidiaries serve as trustee and payment agent for a China Evergrande bond VG158043114= that matures in March 2022 and has $83.5 million in interest coming due on Thursday. "I would characterize Evergrande as a telegraphed and controlled detonation," said Samy Muaddi, the portfolio manager of the $5.1 billion T. market is in a better position to absorb a potential global shock from a major company default than it was before the 2007-2009 financial crisis. The missed payments had been expected as China's housing ministry had said that the company would be unable to pay on time, Bloomberg said.Īs investors and policymakers around the world tried to assess the potential fallout, Securities and Exchange Commission (SEC) chair Gary Gensler said the U.S. 29 for March 2024 notes VG158786753=.īoth bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.Įvergrande missed interest payments due Monday to at least two of its largest bank creditors, Bloomberg reported on Tuesday, citing people familiar with the matter. It has another $47.5 million payment due on Sept. "But so far that concern isn't showing up in parts of the credit markets that have served well as red flags for broader credit crunches in the past."Ī major test for Evergrande comes this week, with the firm due to pay $83.5 million in interest relating to its March 2022 bond VG158043114= on Thursday. "There's been a fair bit of concern about the possibility of contagion from the meltdown at Chinese property developer Evergrande," analysts at New York-based Bespoke wrote in a research note on Tuesday.
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