HONG KONG/SHANGHAI (Reuters) -China Evergrande Group has supplied funds to pay interest on a dollar bond, a source told Reuters on Friday, days before a deadline that would have plunged the embattled developer into formal default.
The source corroborated a story in the state-backed Securities Times on Friday that the company had remitted $83.5 million in coupon payments to a trustee account at Citibank on Thursday, allowing it to pay out to all bond holders before the grace period expires on Oct. 23.
News of the payment will bring some relief to investors and regulators worried about the wider fallout from a messy default and contagion hitting global financial markets elsewhere, although the company will still need to make payments on a string of other debts due.
"They seem to be avoiding short-term default and it's a bit of a relief that they have managed to find liquidity," said a Hong Kong-based restructuring lawyer representing some bondholders.
"But still, Evergrande does need to restructure its debt. This payment might be a way for them to get some sort of buy-in with stakeholders before the heavy work needed on the restructuring."
Evergrande did not immediately respond to Reuters' request for comment. Citi declined to comment.
The wired payment comes a day after financial information provider REDD reported on Thursday that the company had secured more time to pay a defaulted bond issued by Jumbo Fortune Enterprises and guaranteed by Evergrande.
A string of Chinese officials in recent days have sought to reassure investors, saying that creditors' interests would be protected. Market participants nevertheless expressed shock at news of the payment.
"This is a positive surprise," said James Wong, portfolio manager at GaoTeng Global Asset Management Ltd, adding many had expected a default.
The news would boost bondholders' confidence, he said, as "there are many coupon payments due ahead. If Evergrande pays this time, I don't see why it won't pay the next time."
Evergrande missed coupon payments totalling nearly $280 million on its dollar bonds on Sept. 23, Sept. 29 and Oct. 11, starting the clock on 30-day grace periods for payment.
Non-payment of interest for 30 days would result in a formal default by the company, and trigger cross-default provisions for other Evergrande dollar bonds.
Evergrande's next payment deadline falls on Oct. 29 with the expiration of the 30-day grace period on its Sept. 29 coupon.
RELIEF
Evergrande's dollar bond prices surged on Friday morning, with its April 2022 and 2023 notes jumping more than 10%, according to data provider Duration Finance, although they still traded at deeply distressed levels of around a quarter of their face value.
Evergrande's shares rose as much as 7.8%, a day after the resumption of trade following a more than two-week suspension pending the announcement of a scrapped stake sale in its property management unit.
The Hang Seng mainland properties index surged more than 4%, against a 0.25% rise in the broader Hang Seng index.
In mainland markets, the CSI300 Real Estate index jumped as much as 6.5%, and an index tracking the broader property sector was on track for its biggest gain in nearly two months.
HONG KONG/SHANGHAI (Reuters) -China Evergrande Group has supplied funds to pay interest on a dollar bond, a source told Reuters on Friday, days before a deadline that would have plunged the embattled developer into formal default.
The source corroborated a story in the state-backed Securities Times on Friday that the company had remitted $83.5 million in coupon payments to a trustee account at Citibank on Thursday, allowing it to pay out to all bond holders before the grace period expires on Oct. 23.
News of the payment will bring some relief to investors and regulators worried about the wider fallout from a messy default and contagion hitting global financial markets elsewhere, although the company will still need to make payments on a string of other debts due.
"They seem to be avoiding short-term default and it's a bit of a relief that they have managed to find liquidity," said a Hong Kong-based restructuring lawyer representing some bondholders.
"But still, Evergrande does need to restructure its debt. This payment might be a way for them to get some sort of buy-in with stakeholders before the heavy work needed on the restructuring."
Evergrande did not immediately respond to Reuters' request for comment. Citi declined to comment.
The wired payment comes a day after financial information provider REDD reported on Thursday that the company had secured more time to pay a defaulted bond issued by Jumbo Fortune Enterprises and guaranteed by Evergrande.
A string of Chinese officials in recent days have sought to reassure investors, saying that creditors' interests would be protected. Market participants nevertheless expressed shock at news of the payment.
"This is a positive surprise," said James Wong, portfolio manager at GaoTeng Global Asset Management Ltd, adding many had expected a default.
The news would boost bondholders' confidence, he said, as "there are many coupon payments due ahead. If Evergrande pays this time, I don't see why it won't pay the next time."
Evergrande missed coupon payments totalling nearly $280 million on its dollar bonds on Sept. 23, Sept. 29 and Oct. 11, starting the clock on 30-day grace periods for payment.
Non-payment of interest for 30 days would result in a formal default by the company, and trigger cross-default provisions for other Evergrande dollar bonds.
Evergrande's next payment deadline falls on Oct. 29 with the expiration of the 30-day grace period on its Sept. 29 coupon.
RELIEF
Evergrande's dollar bond prices surged on Friday morning, with its April 2022 and 2023 notes jumping more than 10%, according to data provider Duration Finance, although they still traded at deeply distressed levels of around a quarter of their face value.
Evergrande's shares rose as much as 7.8%, a day after the resumption of trade following a more than two-week suspension pending the announcement of a scrapped stake sale in its property management unit.
The Hang Seng mainland properties index surged more than 4%, against a 0.25% rise in the broader Hang Seng index.
In mainland markets, the CSI300 Real Estate index jumped as much as 6.5%, and an index tracking the broader property sector was on track for its biggest gain in nearly two months.
Subscribe to xixi
Subscribe to xixi
Everybody in the whole town talked about the precious cloth
Everybody in the whole town talked about the precious cloth. At last the emperor wished to see it himself, while it was still on the loom. With a number of courtiers, including the two who had already been there, he went to the two clever swindlers, who now worked as hard as they could, but without using any thread."Is it not magnificent?" said the two old statesmen who had been there before. "Your Majesty must admire the colours and the pattern." And then they pointed to the empty looms, for...
结婚后才知道，这三种人，根本没有结婚能力
以前觉得结了婚，就是两个人，带个孩子，过一辈子。 后来发现两个普通人在一起，关系永远在变，每个小细节，都能影响婚姻质量。 变胖几斤，喝酒晚归。 升职加薪，或是辞职带娃，婚姻的天平，都是在摇摆中保持着平衡。 买个手机你要挑款式，钱还要挑真假，和谁结婚，怎么能一样？ 这三种人，根本没有结婚能力。 1 沟通无能的人 林语堂说过：“所谓美满的婚姻，不过是夫妻彼此迁就和习惯的结果，就像一双鞋，穿久了便变得合脚。” 但很遗憾，真正的磨合不靠时间，靠的是沟通。 沟通无能的婚姻，撑得越久，反而越煎熬。 网上有个帖子说：“前任就是个喜欢回避问题的人，我生气从不安慰，他反倒生我的气。” 两个人相处整整半年，网友知道自己也不是没错。 可是有时候办砸了事情，说了难听的话，男友完全不告诉她，全都要靠自己消化。 耗得时间长了，她只觉得越来越累，对比刚在一起时，总有说不完的话，她更觉得男友不在乎她，嫌她烦。 到分手时，她竟看不出男友任何想法。 回忆起才想到，男友和他爸妈的相处也是这样，老人问他什么，有多着急，他都是默不作声。 很多人真的很难沟通，你觉得他不关心你，他觉得你嫌他没钱。 你说他懒散，他说你嫌他没本...
The Sure Thing, the Force Multiplier and the Underdoge
On this episodeSpeaking of Bitcoin on the CoinDesk Podcast Network is brought to you by CrystalBlockchain.com. Why did a joke cryptocurrency with zero ambition find massive success, yet a calculated military campaign with plenty of ambition turned into a massive failure? With the right leverage, 10 men can fight like 100, and one coin can spend like a million.TranscriptHello there- I’m George Frankly and I’m going to take a look at how even the best and brightest people can make truly stupid ...
Everybody in the whole town talked about the precious cloth
Everybody in the whole town talked about the precious cloth. At last the emperor wished to see it himself, while it was still on the loom. With a number of courtiers, including the two who had already been there, he went to the two clever swindlers, who now worked as hard as they could, but without using any thread."Is it not magnificent?" said the two old statesmen who had been there before. "Your Majesty must admire the colours and the pattern." And then they pointed to the empty looms, for...
结婚后才知道，这三种人，根本没有结婚能力
以前觉得结了婚，就是两个人，带个孩子，过一辈子。 后来发现两个普通人在一起，关系永远在变，每个小细节，都能影响婚姻质量。 变胖几斤，喝酒晚归。 升职加薪，或是辞职带娃，婚姻的天平，都是在摇摆中保持着平衡。 买个手机你要挑款式，钱还要挑真假，和谁结婚，怎么能一样？ 这三种人，根本没有结婚能力。 1 沟通无能的人 林语堂说过：“所谓美满的婚姻，不过是夫妻彼此迁就和习惯的结果，就像一双鞋，穿久了便变得合脚。” 但很遗憾，真正的磨合不靠时间，靠的是沟通。 沟通无能的婚姻，撑得越久，反而越煎熬。 网上有个帖子说：“前任就是个喜欢回避问题的人，我生气从不安慰，他反倒生我的气。” 两个人相处整整半年，网友知道自己也不是没错。 可是有时候办砸了事情，说了难听的话，男友完全不告诉她，全都要靠自己消化。 耗得时间长了，她只觉得越来越累，对比刚在一起时，总有说不完的话，她更觉得男友不在乎她，嫌她烦。 到分手时，她竟看不出男友任何想法。 回忆起才想到，男友和他爸妈的相处也是这样，老人问他什么，有多着急，他都是默不作声。 很多人真的很难沟通，你觉得他不关心你，他觉得你嫌他没钱。 你说他懒散，他说你嫌他没本...
The Sure Thing, the Force Multiplier and the Underdoge
On this episodeSpeaking of Bitcoin on the CoinDesk Podcast Network is brought to you by CrystalBlockchain.com. Why did a joke cryptocurrency with zero ambition find massive success, yet a calculated military campaign with plenty of ambition turned into a massive failure? With the right leverage, 10 men can fight like 100, and one coin can spend like a million.TranscriptHello there- I’m George Frankly and I’m going to take a look at how even the best and brightest people can make truly stupid ...
<100 subscribers
<100 subscribers
Share Dialog
Share Dialog
No comments yet