SINGAPORE (Reuters) – China Evergrande slipped toward a kind of limbo on Friday as time ticked away on an interest payment deadline which global markets are watching for signs of default, leaving investors on tenterhooks over the embattled property giant’s fate.
The company has run short of cash to fund its $305 billion in debts and markets are worried that a collapse could pose systemic risks to China’s financial system and reverberate around the world.
Last week Evergrande appointed financial advisers and warned of default and world markets fell heavily on Monday, though they have since stabilized. At its offices, furious small investors have protested to try and retrieve life savings sunk into its properties and wealth-management products.
Evergrande has promised to prioritize them and also resolved one coupon payment on a domestic bond this week. But it has said nothing about an $83.5 million offshore interest payment that was due on Thursday or a $47.5 million payment due next week.
Bondholders are losing hope and starting to think it might be a month or so before things become clearer.
As night fell in New York, there had been no announcements about the payment. A company spokesperson did not respond to requests for comment.
Failure to pay within 30 days of the deadlines would put the bonds in default and stoke concern about a messy liquidation that drags down China’s vast property sector.
“Current market pricing estimates that investors in Evergrande’s dollar bonds are likely to recover very little,” said Jennifer James, a portfolio manager and lead emerging markets analyst at Janus Henderson Investors.
“The likeliest outcome is that the company will engage with creditors to come up with a restructuring agreement,” she said.
“How China handles Evergrande, and others, could be consequential. If mismanaged, then the loss of confidence could have contagion effects to other financial markets.”
Bondholders should know soon after 0100 GMT whether any overnight payments had arrived, a trader in Hong Kong said.
On Thursday Bloomberg Law had reported that Chinese regulators had asked Evergrande to avoid a near-term default, citing anonymous people familiar with the matter.
However the Wall Street Journal separately said, citing unnamed officials, that authorities had asked local governments to prepare for Evergrande’s downfall.
Global markets have begun a recovery following a sharp selloff, trading on the basis that Evergrande’s troubles can be contained. [MKTS/GLOB]
Evergrande’s assets are trading at distressed levels, with the shareprice down more than 80% this year and the dollar bonds with imminent payments due trading around 30 cents on the dollar.
(Reporting by Tom Westbrook. Additional reporting by Clare Jim in Hong Kong and Andrew Galbraith in Shanghai; Editing by Stephen Coates)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
Source link
