The deadline for China Evergrande Group’s next bond payment is fast approaching, as investors scrutinize the property developer for clues about the severity of a cash crisis eroding confidence in other highly indebted pairs.
The 30-day grace period for payment of the coupon of US $ 45.2 million of Evergrande, which initially expired on September 29, ends on Friday.
The deadline looms amid a sell off of speculative-grade Chinese bonds that was fueled Thursday by Kaisa Group Holdings Ltd., one of the largest issuers of dollar debt in the real estate sector.
Evergrande surprised some investors last week when it paid off another expired coupon just before the end of the grace period.
The company’s dollar bonds remain at stress levels, while creditors prepare for an eventual debt restructuring that could be among the largest ever undertaken in China.
Beijing authorities have urged the founder Hui Ka Yan to help pay Evergrande’s obligations to its estate, but its known fortune represents only a fraction of the company’s more than $ 300 billion in liabilities.
Speculation about a default has been around for months and has generated contagion in the credit market among other property developers with liquidity problems, and the erosion of confidence in the Chinese real estate market that, according to some measures, represents more than a quarter part of the economy.
A payment would allow more time to Evergrande while trying to raise funds through asset sales. A delinquency could trigger cross default clauses on the company’s other dollar debt and allow creditors to act to protect its interests.
.
Ricardo is a renowned author and journalist, known for his exceptional writing on top-news stories. He currently works as a writer at the 247 News Agency, where he is known for his ability to deliver breaking news and insightful analysis on the most pressing issues of the day.
