Evergrande: the payment dates for bonds and interest to watch

Evergrande faces increasing pressure to repay its dollar-denominated bonds in the coming months, despite several last-minute transfers in October that helped the heavily indebted Chinese real estate company narrowly avoid a default.

Investors and global markets will be on the lookout for clues as to the possible fate of the world’s most indebted real estate developer, who faces $ 8.1 billion in interest and principal on its offshore bonds ahead of the end of 2022 and has hundreds of projects across China.

Evergrande has not provided an official statement on its missed bond interest payments, several of which triggered 30-day grace periods for payment in September. Two of the payments were then made before the expiration of the grace periods, including one at the end of last week, according to people familiar with the matter.

Evergrande does not have any offshore bonds maturing this year, but the company faces large principal repayments in March and April, both of which present a far greater challenge than the interest payments to which it has. been faced in recent weeks.

The reimbursement requests compare to the company’s $ 13.6 billion cash and cash equivalents at the end of June, according to the latest available data. But the company was then engulfed in a liquidity crunch that put pressure on its vast obligations within mainland China, ranging from wealth management products to the money it owes to contractors, and threw away uncertainty about his financial situation.

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Work on some of its projects has been suspended due to late payments, but has recently resumed at several sites in China.

The Chinese government has also downplayed the gravity of the situation, without indicating what role it is playing in resolving it.

The Evergrande crisis, which could spark one of China’s most important restructuring processes, has spread to more property developers nationwide in the past two months. The sector accounts for a large chunk of debt across the entire Asian high yield bond market, where borrowing costs have skyrocketed. Yields on an ICE index that tracks the riskiest Chinese borrowers were 23.5% on Monday.

Developers like Sinic, Fantasia, and China Modern Land all fell short in October. On Monday, Yango, another real estate company, proposed a debt swap with investors that would delay the repayment of several bonds. He said in an exchange brief that the offers were aimed at improving liquidity and “avoiding defaults”.

With no clear explanation from the company, observers and market participants have had to speculate as to why it made last-minute transfers after missing interest payments in September. Some have suggested that Evergrande is looking to buy time to sell assets overseas, while others say the government is involved behind the scenes.

Beijing is likely to be concerned about the completion of Chinese developments in Evergrande, where many customers bought homes before they were built. At a site on the outskirts of Beijing, the contractors said they stopped working in July but returned last month and learned the government had taken over the project.

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