Evergrande Agrees To A Deal To Avoid A Key Bond Default.
Evergrande, the beleaguered Chinese real estate developer, announced on Wednesday that it has reached an agreement with domestic bondholders that should allow it to avoid missing one of its interest payments and defaulting, but the company’s deeper financial burden remains.
Fears that the massive corporation could collapse have hit financial markets this week, with the potential to send shockwaves through the world’s second-largest economy and possibly beyond.
The Chinese government has stayed deafeningly silent about Evergrande’s difficulties, permitting only sporadic demonstrations from disgruntled investors and left experts speculating about Beijing’s intentions to deal with any fallout from the developer’s failure.
Evergrande’s property unit, Hengda, stated in a statement to the Shenzhen stock exchange that it had arranged a plan to pay interest due on its 2025 bond, which is worth 232 million yuan ($35.9 million).
Evergrande has admitted to being under “extreme strain” as it attempts to pay down a debt load of more than $300 billion, and has warned that it may not be able to meet its obligations.
Xu Jiayin, the business’s founder and formerly Asia’s richest man, said on Tuesday that the company will “come out of the darkest phase shortly.”
The company has made no mention of interest repayments for an offshore bond that is due on Thursday. While this leaves the possibility of it missing a payment, it would still have a 30-day grace period before being considered in default.
Investors who “purchased and held the bonds” before September 22, 2021, according to Hengda’s announcement, “are entitled to interest paid at this time.”
AFP reached out to Evergrande for comment, but they did not respond.
According to analysts, the repayment will help calm markets in the short term.
But, according to Gary Dugan, chief executive officer of the Global CIO Office, “for confidence to return more meaningfully, the market will need to get sight of the overall restructuring plans for Evergrande.”
The Evergrande problem has prompted investor and supplier protests outside a number of the company’s offices in China, with some claiming they are owed as much as $1 million.
Analysts and investors have predicted that, given the company’s debt load, the government will likely step in with some type of assistance, though Beijing has been silent on the matter so far.
Meanwhile, the vagueness of the filing – which did not specify how much or when it would pay – hinted that there was still a lot to overcome.
The announcement of the payout. Brief News from Washington Newsday.