Evergrande reaches deal on key domestic bond payment. What it means

#debt, #Evergrande, #World News

China Evergrande agreed to settle interest payments on a domestic bond on Wednesday, while the Chinese central bank injected cash into the banking system, temporarily soothing fears of imminent contagion from the debt-laden property developer.

Evergrande, Asia’s biggest junk-bond issuer, is so entangled with China’s broader economy that its fate has kept global stock and bond markets on tenterhooks as late debt payments could trigger so-called cross-defaults.

Many financial institutions have exposure to Evergrande through direct loans and indirect holdings, while any defaults will also trigger sell-offs in the high-yield credit market.

In an effort to reassure investors, the People’s Bank of China’s injected 90 billion yuan to the banking system, signalling support for markets as they braced for what is expected to be one of China’s largest-ever debt restructurings.

Evergrande is scrambling to avoid defaulting on a number of bonds with payments due this week and its main unit, Hengda Real Estate Group, said on Wednesday it had “resolved” one coupon payment due on Thursday on its Shenzhen-traded 5.8% September 2025 bond, via “private negotiations”.

It did not specify how much interest would be paid or when, nor did Hengda mention Evergrande’s other pressing debts, leaving it unclear what this means for $83.5 million in dollar bond interest payments due on Thursday.

Evergrande did not immediately respond to questions about its deal or its intentions.

But engagement with bondholders, a common way to avoid default, on top of chairman Hui Ka Yuan’s vow this week that Evergrande would “walk out of its darkest moment,” cheered investors and soothed markets more broadly.

“These events seem to suggest that the company is taking control of the situation and is trying its best to work out a solution with creditors,” Singapore-based Dexter Tan, a senior fixed income analyst at Bondsupermart.com, said.

Evergrande, which epitomised the borrow-to-build business model and was once China’s top-selling developer, also has a $47.5 million dollar-bond interest payment due next week.

“We do not have a clearer picture as how Evergrande settled its onshore coupon,” Singapore-based Chuanyi Zhou, a credit analyst at Lucror Analytics, said.

“It doesn’t look like a cash payment. It may still miss the coupon on offshore bonds due tomorrow.”

Evergrande’s woes have seen its shares fall 85% this year. The concerns have reverberated throughout China’s property market.

Shares of R&F Properties and Sunac China have both slumped around 50% year-to-date, Shimao is down more than 40% and Country Garden and Greenland Holdings have shed 30% and 20%, respectively.

Evergrande’s Hong Kong shares did not trade due to a public holiday but rose 40% in Frankfurt to 0.38 euros ($0.45).

Its dollar bonds maturing next year and in 2024 remained below 30 cents on the dollar.

In the wider market, the U.S. dollar slipped while the S&P 500 rebounded from recent losses.

BREAKDOWN

Analysts have been downplaying the risk that a collapse threatens a “Lehman moment”, or liquidity crunch, which freezes the financial system and spreads globally.

Only some $20 billion of $305 billion outstanding debts is owed offshore, according to Refinitiv data.

But the risk of failure remains high, particularly if offshore bondholders are less willing than those in China to cut deals, and the fallout has already begun to trigger tremors in the property market of the world’s second-largest economy.

“There are now comparisons being made between Evergrande with the collapse (of) Lehman Brothers and the crash in the U.S. housing market, with many analysts dismissing this comparison,” wrote Sebastien Galy of Nordea Asset Management in a recent note. “The reality is that it will take weeks to figure out the impact on growth given the impact on the real estate market.”

There is also mounting political pressure to act as the anger of retail investors with their savings sunk in Evergrande properties or wealth management products swells.

Asked at a regular daily briefing on Wednesday whether China would take measures to intervene, foreign ministry spokesman Zhao Lijian only referred to the “responsible departments”.

Some funds have been increasing their positions in recent months. BlackRock and investment banks HSBC and UBS have been among the largest buyers of Evergrande’s debt, Morningstar https://www.morningstar.hk/hk/news/215418/whos-buying-evergrandes-bonds.aspx?lang=en-hk data and a blog post showed.

Other bondholders include UBS Asset Management and Amundi, Europe’s largest asset manager.

Still, many market participants believe the fallout from Evergrande is likely to be contained.

“Despite the worry, so far this looks like a corporate bankruptcy and not something worse,” said Brad McMillan, chief investment officer for Commonwealth Financial Network in a recent note. “It’s a big one, to be sure, but one that can be handled within the system.”

Internet Explorer Channel Network
News Related

OTHER NEWS

Asit C Mehta Standalone September 2021 Net Sales at Rs 0.50 crore, down 40.83% Y-o-Y

Reported Standalone quarterly numbers for Asit C Mehta Financial Services are: Net Sales at Rs 0.50 crore in September 2021 down 40.83% from Rs. 0.84 crore in September 2020. Quarterly ... Read more »

Transport Corp Standalone September 2021 Net Sales at Rs 736.50 crore, up 20.3% Y-o-Y

Reported Standalone quarterly numbers for Transport Corporation of India are: Net Sales at Rs 736.50 crore in September 2021 up 20.3% from Rs. 612.20 crore in September 2020. Quarterly Net ... Read more »

Geojit Fin Standalone September 2021 Net Sales at Rs 124.54 crore, up 21.17% Y-o-Y

Reported Standalone quarterly numbers for Geojit Financial Services are: Net Sales at Rs 124.54 crore in September 2021 up 21.17% from Rs. 102.79 crore in September 2020. Quarterly Net Profit ... Read more »

MMP Industries Standalone September 2021 Net Sales at Rs 92.41 crore, up 79.49% Y-o-Y

Reported Standalone quarterly numbers for MMP Industries Ltd. are: Net Sales at Rs 92.41 crore in September 2021 up 79.49% from Rs. 51.48 crore in September 2020. Quarterly Net Profit ... Read more »

Uttam Sugar Standalone September 2021 Net Sales at Rs 476.40 crore, up 12.75% Y-o-Y

Reported Standalone quarterly numbers for Uttam Sugar Mills are: Net Sales at Rs 476.40 crore in September 2021 up 12.75% from Rs. 422.51 crore in September 2020. Quarterly Net Profit ... Read more »

LKP Finance Standalone September 2021 Net Sales at Rs 21.09 crore, up 130.07% Y-o-Y

Reported Standalone quarterly numbers for LKP Finance are: Net Sales at Rs 21.09 crore in September 2021 up 130.07% from Rs. 9.16 crore in September 2020. Quarterly Net Profit at ... Read more »

Interglobe Avi Standalone September 2021 Net Sales at Rs 5,608.50 crore, up 104.62% Y-o-Y

Reported Standalone quarterly numbers for Interglobe Aviation are: Net Sales at Rs 5,608.50 crore in September 2021 up 104.62% from Rs. 2,740.96 crore in September 2020. Quarterly Net Loss at ... Read more »

Arvind Standalone September 2021 Net Sales at Rs 1,988.61 crore, up 70% Y-o-Y

Reported Standalone quarterly numbers for Arvind are: Net Sales at Rs 1,988.61 crore in September 2021 up 70% from Rs. 1,169.75 crore in September 2020. Quarterly Net Profit at Rs. ... Read more »

DLF Standalone September 2021 Net Sales at Rs 961.90 crore, down 10.06% Y-o-Y

Reported Standalone quarterly numbers for DLF are: Net Sales at Rs 961.90 crore in September 2021 down 10.06% from Rs. 1,069.47 crore in September 2020. Quarterly Net Profit at Rs. ... Read more »

HSIL Standalone September 2021 Net Sales at Rs 546.21 crore, up 28.11% Y-o-Y

Reported Standalone quarterly numbers for HSIL are: Net Sales at Rs 546.21 crore in September 2021 up 28.11% from Rs. 426.35 crore in September 2020. Quarterly Net Profit at Rs. ... Read more »

Banaras Beads Standalone September 2021 Net Sales at Rs 10.69 crore, up 59.53% Y-o-Y

Reported Standalone quarterly numbers for Banaras Beads are: Net Sales at Rs 10.69 crore in September 2021 up 59.53% from Rs. 6.70 crore in September 2020. Quarterly Net Profit at ... Read more »

MAS Financial S Standalone September 2021 Net Sales at Rs 156.47 crore, up 2.52% Y-o-Y

Reported Standalone quarterly numbers for MAS Financial Services are: Net Sales at Rs 156.47 crore in September 2021 up 2.52% from Rs. 152.62 crore in September 2020. Quarterly Net Profit ... Read more »

Avance Tech Standalone September 2021 Net Sales at Rs 4.87 crore, up 4873650% Y-o-Y

Reported Standalone quarterly numbers for Avance Technologies are: Net Sales at Rs 4.87 crore in September 2021 up 4873650% from Rs. 0.00 crore in September 2020. Quarterly Net Profit at ... Read more »

Umang Dairies Standalone September 2021 Net Sales at Rs 48.53 crore, down 21.99% Y-o-Y

Reported Standalone quarterly numbers for Umang Dairies are: Net Sales at Rs 48.53 crore in September 2021 down 21.99% from Rs. 62.21 crore in September 2020. Quarterly Net Loss at ... Read more »

Schaeffler Ind Standalone September 2021 Net Sales at Rs 1,487.58 crore, up 32.74% Y-o-Y

Reported Standalone quarterly numbers for Schaeffler India are: Net Sales at Rs 1,487.58 crore in September 2021 up 32.74% from Rs. 1,120.65 crore in September 2020. Quarterly Net Profit at ... Read more »

HIL Standalone September 2021 Net Sales at Rs 422.41 crore, up 21.45% Y-o-Y

Reported Standalone quarterly numbers for HIL are: Net Sales at Rs 422.41 crore in September 2021 up 21.45% from Rs. 347.82 crore in September 2020. Quarterly Net Profit at Rs. ... Read more »

Medinova Diag Standalone September 2021 Net Sales at Rs 2.81 crore, down 35.58% Y-o-Y

Reported Standalone quarterly numbers for Medinova Diagnostic Services are: Net Sales at Rs 2.81 crore in September 2021 down 35.58% from Rs. 4.36 crore in September 2020. Quarterly Net Profit ... Read more »

Silgo Retail Standalone September 2021 Net Sales at Rs 8.70 crore, up 38.05% Y-o-Y

Reported Standalone quarterly numbers for Silgo Retail are: Net Sales at Rs 8.70 crore in September 2021 up 38.05% from Rs. 6.31 crore in September 2020. Quarterly Net Profit at ... Read more »

Laurus Labs Standalone September 2021 Net Sales at Rs 1,176.20 crore, up 4.34% Y-o-Y

Reported Standalone quarterly numbers for Laurus Labs are: Net Sales at Rs 1,176.20 crore in September 2021 up 4.34% from Rs. 1,127.30 crore in September 2020. Quarterly Net Profit at ... Read more »

Mahindra Finance Q2 net jumps over three-fold to Rs 1,103 crore

Mahindra & Mahindra Financial Services (Mahindra Finance) on Thursday reported an over three-fold rise in consolidated net profit at Rs 1,103 crore for the September quarter, boosted by healthy operating ... Read more »

T-Mobile also removes phones from some stores after robberies

T-Mobile does not state exactly what the risk areas are. Customers who order telephones in the store will receive them at home the next day, the company writes. T-Mobile also ... Read more »

IKEA gives transgender staff leave for gender reassignment

Furniture store IKEA Netherlands now gives paid leave to transgender employees who want to change gender. The chain has made agreements about this with the trade union FNV. All IKEA ... Read more »

Hertz says it may expand supply of Teslas to Uber to 150,000

Rental car company Hertz said on Thursday it could expand plans to supply Tesla vehicles to Uber to 150,000 during the next three years from an initial fleet of 50,000, ... Read more »

Budget 2021: Sunak's budget was progressive - but that doesn't mean you will feel better off

This was a progressive budget. But it won't change the squeeze on living standards that has been a feature of this country’s economic landscape for half a generation now. Read more »

Ikea transgender staff gets paid leave for gender reassignment

People who want to change their gender can take a total of 24 weeks of leave for medical and non-medical treatment over a period of ten years, FNV said. They ... Read more »

Karnataka Bank Q2 net profit up 5% at Rs 126 crore

Private sector Karnataka Bank on Thursday reported a moderate rise of 5.17 per cent in its net profit at Rs 125.61 crore in the second quarter ended September 2021. The ... Read more »

Stocks making the biggest moves midday: Ford, eBay, Apple, Tesla, Merck and more

Ford Motor Co. CEO Jim Farley walks to speak at a news conference at the Rouge Complex in Dearborn, Michigan, September 17, 2020.Rebecca Cook | Reuters Check out the companies ... Read more »

Fino Payments Bank mobilises Rs 538.78 crore from anchor investors ahead of IPO

Representative image Fintech company Fino Payments Bank on October 28 garnered Rs 538.78 crore from 29 anchor investors, ahead of its initial public offering (IPO). The offer will open for ... Read more »

Tesco and Gorillas partner for rapid grocery deliveries

The company is one of a number, like Zapp, Weezy, and Getir, currently burning through investor money in a battle for supremacy. Read more »

As 100 ships idle offshore, California communities see rise in toxic pollutants

"We can’t forget that when we’re talking about air pollution and air quality, this comes down to people’s longevity.” Read more »

Coal India has stepped up coal supply to meet increased demand of power sector: Pralhad Joshi

Representative image Coal Minister Pralhad Joshi on Thursday said state-owned CIL has stepped up fuel supply to meet the increased demand of the power sector and arrest shortages at thermal ... Read more »

NFTs are a financial opportunity for athletes as well as buyers: Sunil Gavaskar

Sunil Gavaskar Sunil Gavaskar was the first Indian athlete to become a major brand. His legendary career, in which he became the first man in history to score 10,000 Test ... Read more »

Very few Big Oil climate targets 'have meaning': Former BP CEO Lord John Browne

Big Oil CEOs can no longer express doubt that burning of fossil fuels is a large contributor to climate change. Former BP CEO John Browne was way ahead of his ... Read more »

5 things you need to know about China's power crisis

1. China’s state planner is weighing steps to tame prices China’s state planner has met coal producers and an industry body to discuss measures such as setting price levels and ... Read more »

Sebi comes out with guidelines for investment, trading by AMCs' employees

SEBI (PC-Reuters) Markets regulator Sebi on Thursday came out with a new framework for investment and trading in securities by employees of Asset Management Companies (AMCs) and trustees of mutual ... Read more »

AU Small Finance Bank Q2 profit falls to Rs 279 crore

AU Small Finance Bank AU Small Finance Bank on Thursday reported 13 per cent decline in net profit at Rs 279 crore for September quarter 2021-22 due to rise in ... Read more »

Shell share falls on Amsterdam stock exchange

Shell shares fell on the Amsterdam stock exchange on Thursday. In addition to the results of the oil and gas group, investors considered the call from activist shareholder Third Point ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic