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Evergrande makes an early payment: risk-on sentiment improves

Evergrande Group paid interest on a bond in dollars before Saturday’s deadline, pushing out shares and bonds of the troubled company.

The company has sent in a $ 83.5 million payment and bondholders will receive the funds before Saturday. The 30-day grace period for the payment would expire on Saturday after the company missed the initial payment date. Evergrande officials declined to comment.

The payment offers temporary relief for the world’s most indebted construction company, and provides more time to sell assets and raise cash to pay creditors and suppliers. However, the delay could be short-lived, with more than $ 300 billion in debt still to be paid.

The company reiterated that it has not made significant progress in selling assets.

We’ve seen this before – a bond payment doesn’t solve the company’s problem and doesn’t change the fact that it’s a living dead, “said Justin Tang of United First Partners in Singapore.

Meanwhile, China’s banking regulator has dismissed fears that the Evergrande crisis will have a serious impact on the sector as a whole. Evergrande is an “individual” case, Liu Zhungrui, an official with the Chinese Banking and Insurance Regulatory Commission, told a briefing in Beijing.

Evergrande Group will continue to implement measures to alleviate its liquidity problems, the company said in a report to the Shenzhen Stock Exchange.

In recent days, Chinese authorities have tried to reduce the most serious concerns among large hedge funds through speeches, articles in state media, freer politics and, in some cases, direct intervention. The message is clear: Beijing will work to avoid the collapse of the real estate market, tackle energy shortages, curb China Evergrande Group’s debt crisis and repression in the technology market, with President Xi Jinping clarifying for the first time what he is trying to achieve. general prosperity campaign.

The payoff helps allay fears that Evergrande is heading for bankruptcy after a plan to sell shares failed this week. Fears of a deepening debt crisis gripped market players, even as Chinese politicians said the crisis would be contained and took action to ease pressure on other real estate companies.

China Evergrande Group stepped back from the brink of bankruptcy by paying off a bond coupon ahead of schedule this weekend.

Failure to speculate has been going on for months, fueling fears of a deepening crisis, undermining confidence in China’s real estate market, which by some measures accounts for more than a quarter of the economy.

The payment of interest by Evergrande on a dollar bond is positive news for debt holders, but uncertainties remain as to whether the troubled company will be able to provide funds for future payments.

While Zeng Jie’s Fantasia Holdings Group is small compared to troubled giant China Evergrande Group, its shocking failure to repay a $ 205.7 million bond earlier this month sparked a dramatic sell-off in the offshore market, with some investors taking it as a harbinger of a deteriorating liquidity crisis for Chinese companies with large leverage in the sector.

Hopson Development said Evergrande has requested significant changes to the agreement to sell shares in the management of the property after signing it, including the terms of payment.

China’s banking regulator has promised to maintain tight control over the national real estate market, dismissing fears that the Evergrande crisis will have a significant impact on the sector’s credit profile as a whole.

Liu Zhongrui, an official with the Chinese Banking and Insurance Regulatory Commission, said Evergrande was an “individual” case and would not harm the overall confidence in Chinese companies, which is supported by the country’s economic stability.

Charts: with permission of Bloomberg Financials L.P.


 Junior Trader Nikolay Stoychev

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