Evergrande teeters on edge of default as $148 million payment falls

By Andrew Galbraith and Clare Jim

SHANGHAI/HONG KONG (Reuters) -Some bondholders of cash-strapped China Evergrande Group have not received coupon payments by the end of 30-day grace periods at close of Asia business on Wednesday, sources said, pushing the developer again to the edge of default.

Evergrande, the world’s most indebted developer, has been stumbling from deadline to deadline in recent weeks as it grapples with more than $300 billion in liabilities, $19 billion of which are international market bonds.

The company has not defaulted on any of its offshore debt obligations. But a 30-day grace period on coupon payments of more than $148 million on its April 2022, 2023 and 2024 bonds ends on Wednesday.

A failure to pay would result in a formal default by the company, and trigger cross-default provisions for other Evergrande dollar bonds, exacerbating a debt crisis looming over the world’s second-largest economy.

Exactly what time the grace period expires on Wednesday is unclear, but the two sources with knowledge of the matter said some bondholders had not been paid by the end of the Asian business day. They declined to be named as they were not authorised to speak to the media.

Evergrande declined to comment.

For its two separate offshore coupon payment obligations that were due in late September, the developer’s bondholders did not receive the payments until one working day after the 30-day grace periods ended.

Evergrande’s problems add to concerns about a liquidity squeeze in the property sector. It also has coupon payments totalling more than $255 million on its June 2023 and 2025 bonds due on Dec. 28.

China’s property woes nL4N2RI1AS rattled global markets in September and October. There was a brief lull in mid-October after Beijing tried to reassure markets the crisis would not be allowed to spiral out of control.

But concerns have resurfaced, with the U.S. Federal Reserve warning on Tuesday that China’s troubled property sector could pose global risks.

More developers are seeing their credit ratings slashed on their worsening financial profiles.

Moody’s (NYSE:) Investors Service on Wednesday downgraded Kaisa Group, which on Tuesday made a desperate plea https://www.reuters.com/world/china/chinas-state-council-held-meeting-with-property-developers-banks-source-2021-11-09/#:~:text=%E2%80%9CFinancial%20stresses%20in%20China%20could,twice-yearly%20financial%20stability%20report for help, citing liquidity risks, limited financial flexibility, and weak recovery prospects for its creditors.

Kaisa has the most offshore debt of any Chinese developer, after Evergrande. The developer has coupon payments of more than $59 million due on Thursday and Friday.

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