Evergrande misses third round of bond coupon payments
BEIJING: China Evergrande Group has missed its third round of bond payments in three weeks, intensifying market fears over contagion involving other property developers as a wall of debt payment obligations come due in the near-term, Reuters reported.
Some bondholders said they did not receive coupon payments totalling $148 million on Evergrande’s April 2022, April 2023 and April 2024 notes due by 0400 GMT on Tuesday, following two other payments it missed in September.
That puts investors at risk of large losses at the end of 30-day grace periods as the developer wrestles with more than $300 billion in liabilities.
Evergrande did not immediately respond to a request for comment.
A total of $92.3 billion bonds issued by Chinese developers will be due in the next year, Refinitiv data show.
“We see more defaults ahead if the liquidity problem does not improve markedly,” said brokerage CGS-CIMB in a note, adding developers with weaker credit rating are having difficulty in refinancing at the moment.
Trading of high-yield bonds remained soft on Tuesday following a rout in the previous session on fears about fast-spreading contagion in the $5 trillion sector, which accounts for a quarter of the Chinese economy and often is a major factor in policymaking.
Small developers Modern Land and Sinic Holdings were the latest scrambling to delay deadlines, after Evergrande and Fantasia missed their payments since September.
On Monday, Fantasia Holdings’ unit limited trading in its Shanghai bonds, which is often done ahead of defaults.
Market indicators suggested that worries about contagion and a slowing economy are spreading further.
Market players say the sell-off, however, appears limited to more riskier bond names.
The cost of insuring against a China sovereign default continued to rise on Tuesday, with 5-year credit default swaps, which investors typically use as a hedge against rising risk, hitting its highest point since April 2020.
However, Evergrande’s electric vehicles unit jumped over 10 per cent after it vowed to start producing cars next year.
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