Evergrande, on the verge of default after maturity of US $ 148 million

Some creditors through China Evergrande Group bonds have not received coupon payments at the end of a 30-day grace period at the close of business in Asia on Wednesday, sources said, pushing the huge promoter back to the brink. non-payment.

Evergrande, the world’s most indebted real estate developer, has been tumbling between payment terms in recent weeks as it grappled with more than $ 300 billion in liabilities, $ 19 billion of which are international bonds.

The company has not defaulted on any of its foreign debt obligations, but a 30-day grace period ends on Wednesday for the payment of coupons for more than US $ 148 million in bonds from April 2022, 2023 and 2024.

If it does not pay, the company will incur a formal default and the cross default provisions will be activated for other US dollar bonds. Evergrande, which would aggravate the debt crisis looming over the second largest economy in the world.

It’s unclear exactly what time the grace period expires on Wednesday, but two sources with knowledge of the matter said some bondholders had not received payment by the end of the Asian business day.

The sources did not want to give their name because they were not authorized to speak to the media. Evergrande declined to comment.

“The expectation is that it be paid“Said Karl Clowry, restructuring advisor and partner at Addleshaw Goddard LLP, also noting a possible relaxation in the coming weeks of the”three red lines”, Financial requirements that the central bank imposed last year on developers to obtain new bank loans.

“It would be quite a surprise if the funds did not flow to the trustee in the required time frame, given the immediate cross-default and the domino effect on suppliers and the property market of the People’s Republic of China in general ”.

China’s real estate problems shook world markets in September and October. There was a brief lull in mid-October after Beijing tried to assure markets that the crisis would not spiral out of control.

However, concerns have resurfaced, and the US Federal Reserve (Fed) warned on Tuesday that China’s troubled real estate sector could pose global risks.

More and more promoters see their credit rating cut due to the deterioration of their financial profile.

Concern about the possible consequences of Evergrande It has also shaken the Chinese real estate sector in recent days, hitting the bonds of real estate companies on fears that the crisis will spread to other markets and sectors.