China’s Evergrande bondholders in limbo as debt deadline passes

Issued on:

China Evergrande slipped toward a kind of limbo on Friday as time ticked away on an interest payment deadline which global markets are watching for signs of default, leaving investors on tenterhooks over the embattled property giant’s fate.

The company has run short of cash to fund its $305 billion in debts and markets are worried that a collapse could pose systemic risks to China’s financial system and reverberate around the world.

Last week Evergrande appointed financial advisers and warned of default and world markets fell heavily on Monday, though they have since stabilised. At its offices, furious small investors have protested to try and retrieve life savings sunk into its properties and wealth-management products.

Evergrande has promised to prioritise them and also resolved one coupon payment on a domestic bond this week. But it has said nothing about an $83.5 million offshore interest payment that was due on Thursday or a $47.5 million payment due next week.

Bondholders are losing hope and starting to think it might be a month or so before things become clearer.

As night fell in New York, there had been no announcements about the payment. A company spokesperson did not respond to requests for comment.

Failure to pay within 30 days of the deadlines would put the bonds in default and stoke concern about a messy liquidation that drags down China’s vast property sector.

“Current market pricing estimates that investors in Evergrande’s dollar bonds are likely to recover very little,” said Jennifer James, a portfolio manager and lead emerging markets analyst at Janus Henderson Investors.

“The likeliest outcome is that the company will engage with creditors to come up with a restructuring agreement,” she said.

As”How China handles Evergrande, and others, could be consequential. If mismanaged, then the loss of confidence could have contagion effects to other financial markets.”

Bondholders should know soon after 0100 GMT whether any overnight payments had arrived, a trader in Hong Kong said.

On Thursday Bloomberg Law had reported that Chinese regulators had asked Evergrande to avoid a near-term default, citing unnamed people familiar with the matter.

However the Wall Street Journal separately said, citing unnamed officials, that authorities had asked local governments to prepare for Evergrande’s downfall.

Global markets have begun a recovery following a sharp selloff, trading on the basis that Evergrande’s troubles can be contained.

Evergrande’s assets are trading at distressed levels, with the shareprice down more than 80% this year and the dollar bonds with imminent payments due trading around 30 cents on the dollar.

(REUTERS)

Stay connected with us on social media platform for instant update click here to join our  Twitter, & Facebook

We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.

For all the latest Health News Click Here 

 For the latest news and updates, follow us on Google News

Read original article here

Denial of responsibility! TechiLive.in is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.