Some investors did not receive the Evergrande unit bond interest due on November 6, sources say

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The company logo can be seen at the headquarters of the China Evergrande Group in Shenzhen, Guangdong Province, China on September 26, 2021. REUTERS / Aly Song

HONG KONG / SHANGHAI, November 8 (Reuters) – Some holders of offshore bonds issued by a unit of developer China Evergrande Group (3333.HK) had not received the interest payments due November 6 Monday evening in Asia, according to two people close to the case said.

Scenery Journey Ltd was scheduled to make semi-annual coupon payments of a combined value of $ 82.49 million on its US dollar bonds at 13% November 2022 and 13.75% November 2023 on Saturday.,

Failure to pay interest by November 6 would have triggered a 30-day grace period for payment.

Twice in October, Evergrande narrowly avoided catastrophic defaults on its $ 19 billion bonds in international financial markets by paying coupons just before their grace periods expired.

One of those periods expires on Wednesday, November 10 for more than $ 148 million in coupon payments that were due on October 11. Evergrande is also due to make coupon payments totaling more than $ 255 million on its June 2023 and December 2025 bonds. 28.

An Evergrande spokesperson did not immediately respond to a request for comment. The sources could not be named because they were not authorized to speak to the media.

Reuters has not been able to determine whether Evergrande has told bondholders what it plans to do regarding the coupon payment due on Saturday.

BONDS, FALLING SHARES

Evergrande shares edged down on Monday, ending the day 0.9% lower. They have fallen almost 85% this year. Data from Duration Finance showed the company’s dollar bonds continued to trade at discounts of around 75% from face value on Monday.

Once China’s best-selling developer, Evergrande has incurred more than $ 300 billion in liabilities, and its liquidity problems spill over into the country’s $ 5,000 billion real estate sector, sparking a series of defaults at overseas, downgrades of credit ratings and massive sales in the stocks and bonds of promoters in recent weeks.

Spreads on Chinese high-yield dollar (.MERACYC) corporate debt widened to record highs on Friday, and on Monday, data from the Shanghai Stock Exchange showed that promoter bonds once again dominated the list of biggest losers of the day. A yuan bond issued by an onshore unit of the Shimao group (0813.HK) was suspended after falling more than 34%.

The falls even extended to investment grade names. Tradeweb data showed that a 4.75% January 2030 bond issued by a unit of Sino-Ocean Group Holding (3377.HK) fell nearly 15% on Monday to just over 75 cents. Sino-Ocean is rated “BBB-” by Fitch Ratings and has a “Baa3” rating from Moody’s Investors Service.

Nomura economists Ting Lu and Jing Wang said in a memo that they expected “much higher” repayment pressures on developers over the next few quarters, rising to almost $ 10.2 billion in the fourth. quarter of 2021 to $ 19.8 billion and $ 18.5 billion in the first and second quarters. of 2022, respectively.

“With the worsening of the real estate sector, we could see a rebound in onshore developer defaults, and bond prices in onshore and offshore markets could be increasingly influenced as investors are on the alert,” they declared.

“We believe that regulators are likely to step up their efforts to avoid an increase in defaults in the Chinese market (offshore dollar commercial bonds).”

In October, regulators called on developers to proactively prepare for repayment of principal and interest on their foreign bonds and “jointly maintain their own reputation and general market order.” Read more

Reporting by Clare Jim and Andrew Galbraith; Editing by Muralikumar Anantharaman and Louise Heavens

Our standards: Thomson Reuters Trust Principles.


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