Interest Payment Made; Junk Bonds Rally: Evergrande Update




  • In Business
  • 2021-10-22 05:12:38Z
  • By Bloomberg
 

(Bloomberg) -- China Evergrande Group made an interest payment on a dollar bond ahead of a Saturday deadline, sending the embattled developer's stock and bonds higher.

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The company wired the $83.5 million payment, and bondholders will receive the funds before Saturday, according to people familiar with the matter. A 30-day grace period for the bond coupon would have expired on Saturday after the firm missed the original payment date. An Evergrande representative declined to comment.

Evergrande's stock jumped as much as 7.8% in Hong Kong before paring gains. The firm's 8.25% note maturing in March jumped 1.3 cents on the dollar to 25.7 cents. Asian junk bonds also rose.

The payment offers some temporary relief for Evergrande, giving it more time to sell assets and raise cash to pay creditors and suppliers. The reprieve may be short-lived however, with more than $300 billion in liabilities still to be paid, analysts said.

"We have seen this before - one bond repayment does not solve the company's problem and does not change the fact that it is the living dead," said Justin Tang, head of Asian research at United First Partners in Singapore.

China's banking regulator meanwhile dismissed concerns that the crisis enveloping Evergrande will have any major impact on the the sector as a whole, even as shares of the developer nosedived on Thursday.

Evergrande is an "individual" case, Liu Zhongrui, an official at the China Banking and Insurance Regulatory Commission, said at a briefing in Beijing.

Key Developments:

China Vows to Keep Property Curbs, Evergrande Risk Seen Limited

Evergrande Secures Extension on Jumbo Fortune Bond: REDD

Morgan Stanley Team Turns Bullish China HY, Says Prices Too Low

China Property Easing Bodes Well for Developer Bonds: Goldman

Evergrande Shares Offer 'No Value' Without Cash Infusion: UFP

Modern Land China Halted in Hong Kong Pending Inside Information

Kaisa Bonds Fall After Investor Meetings Canceled This Week (1)

Evergrande Ends Talks for Cash-Infusing Sale of Management Arm

Repayment Lifts Chinese Developers, Asia Junk Bonds (12:25 p.m. HK)

A relief rally boosted risk-sensitive assets including Chinese developers, junk bonds and the Australian dollar after Evergrande paid interest on one of its dollar bonds.

The Shanghai Stock Exchange Property Index climbed as much as 4.6%, while high-yield dollar bonds rose three cents on the dollar. Leveraged funds bought the Aussie on the repayment report, a trader said, though the currency later pared gains.

The repayment helps soothe concerns that the world's most indebted developer is heading to a default after a plan to sell a stake in a unit collapsed this week. Contagion fears had gripped traders across markets, even as Chinese policymakers said the crisis will be contained and acted to ease pressure on other real estate companies.

Evergrande Pays Bond Interest Due Saturday (12:20 p.m HK)

China Evergrande Group pulled back from the brink of default by paying a bond coupon before this weekend's deadline, according to people with knowledge of the matter, the latest twist in a months-long drama that has captivated global investors.

The company wired the $83.5 million payment and bondholders will receive the funds before Saturday, the people said, asking not to be identified because the transaction is private. A 30-day grace period for the bond coupon would have expired on Saturday after the firm missed the original payment date. An Evergrande representative declined to comment.

Speculation about a default has been swirling for months, stoking credit-market contagion among other cash-strapped developers and eroding confidence in a Chinese real estate market that by some measures accounts for more than a quarter of the economy.

'Living Dead' Evergrande Not Out of Woods With Payment (12:15 p.m. HK)

China Evergrande Group's payment of interest on a dollar bond is positive news for debt holders, but uncertainties remain on whether the distressed developer can secure cash for looming repayments, according to analysts.

Shares of the firm advanced as much as 7.8% in Hong Kong after the developer wired $83.5 million in a bond coupon payment ahead of this weekend's deadline.

Princeling's Surprise Default Roils Global Investors (7:45 a.m. HK)

Zeng Jie's uncle was once China's vice president. Her grandfather served as Mao Zedong's minister of internal affairs.

Now the 50-year-old "princeling" -- a term that refers to the descendants of powerful Communist Party founding members -- is gaining renown of her own as a central figure in the turmoil rippling through China's real estate sector.

While her Fantasia Holdings Group is small relative to troubled giant China Evergrande Group, its shock failure to repay a $205.7 million bond earlier this month spurred a dramatic selloff in the offshore market, with some investors taking it as a harbinger of a worsening liquidity crisis for China's heavily leveraged property firms.

Offshore Creditors May Seek Talks After Grace Period (1:20 p.m. NY)

Offshore creditors to Evergrande may seek a standstill and debt talks with the firm if it fails to make an interest payment by a Saturday grace period deadline, according to people with knowledge of the matter.

Bondholders, some of whom are getting advice from Kirkland & Ellis and Moelis & Co., aren't planning to demand immediate repayment after the deadline in hopes that the company will come to the table to discuss options for the missed payment, said the people, who asked not to be identified discussing confidential matters.

Evergrande has now met the deadline, according to a report in the Securities Times.

Hopson: Evergrande's Requests to Change Terms Unacceptable (Noon NY)

Hopson Development says Evergrande requested substantial changes to an agreement on the sale of a stake in its property-management arm after it was signed, including terms of payment, according to a filing to the Hong Kong stock exchange.

China Vows to Keep Property Curbs; Evergrande Risk Limited (4:25 p.m. HK)

China's banking regulator vowed to keep its curbs on the nation's property market, dismissing concerns that the crisis enveloping Evergrande will have any major impact on the credit profile of the sector as a whole.

The property controls have achieved good results and the government will refrain from using the real estate sector as a short-term economic stimulus measure, Liu Zhongrui, an official at the China Banking and Insurance Regulatory Commission, said at a briefing in Beijing on Thursday. Evergrande is an "individual" case and won't hurt the overall credibility of Chinese firms, which is backed by the country's economic stability, he said.

Evergrande deadlines:

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