Analysis-Investors denied their Ever-grande finale…for now By

By Marc Jones and Andrew Galbraith

LONDON/SHANGHAI (Reuters) – Investors who have watched China’s property sector crisis play out in recent months have just been denied their Evergrande grand finale as the world’s most indebted developer dodged a $19 billion default, but they might not have too long to wait.

China Evergrande Group’s woes have been snowballing for months. Dwindling resources set against 2 trillion yuan ($305 billion) of liabilities have wiped out 80% of its value this year, and there is still a stream of bills to be paid.

Economists are worried an implosion of the super-sized builder may be impossible to control, toppling other developers and turning an already-defining crisis for the world’s second largest economy into a full-blown disaster.

For now, its decision to transfer the $83.5 million needed to pay a month overdue bond coupon has staved off disaster.

“There is a positive out of this, they have not defaulted,” said Himanshu Porwal, corporate credit analyst at Seaport Global in London.

“But they are not out of the woods. There is a huge ticking time bomb of $37 billion of short-term debt.”

Evergrande still needs to make overdue coupon payments of $195 million, with the next major deadlines to avoid default on Oct. 29 and Nov. 10. It then has a further $340 million of international market bond payments due this year and another $6.1 billion next year, plus tens of billions for local bonds and bank loans.

A number of smaller developers have already been forced to the wall, and with roughly a third of the sector’s $232 billion of cross-border bonds needing to be refinanced by the end of next year according to Fitch, borrowing markets need to be prised back open.

That requires confidence, which has been almost completely drained by the Evergrande saga. If the company is to survive it will need to quickly sell its assets, which will be tricky.

Just this week a $2.6 billion stake sale fell through and plans sell its Hong Kong headquarters have also collapsed.

Still, Hayden Briscoe, head of Asia-Pacific fixed income at UBS Asset Management, thinks Evergrande’s assets are still worth more than its battered bond prices of 20-27 cents on the dollar reflect.

“The surprise factor here is actually skewed in the opposite direction, upside surprise.”

LEHMAN MOMENT

Omotunde Lawal, head of emerging-markets corporate debt at asset manager Barings, said the darkest moment was when amid the Evergrande turmoil, another sizable property firm, Fantasia, defaulted out of the blue.

Although the worst of the rout has been mainly confined to Asia’s high-yield markets, the risk premiums, or spread, investors were demanding to hold Asian property firms’ bonds rocketed to an…