Evergrande Averts Default Again With Overdue Bond Payment

  • Bloomberg
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Evergrande Averts Default Again With Overdue Bond Payment

(Bloomberg) -- Holders of another China Evergrande Group bond received an overdue interest payment within the grace period for such transactions, according to people with knowledge of the situation, the second time this month that the troubled developer staved off a default. 

Certain holders of the 9.5% U.S. dollar-denominated note maturing in 2024 received notification that they had been paid on Thursday, said the people, who asked not to be identified discussing private payments. Evergrande skipped an interest payment due Sept. 29, starting the clock on a 30-day grace period before investors could declare a default. 

The latest payment to international bondholders comes after Evergrande pulled back from the brink of default last week by meeting another delayed coupon before that grace period ended. While that payment surprised some investors, the firm’s dollar notes remain at distressed levels as creditors brace for an eventual debt restructuring that could rank among the largest ever in China.

Advisers to Evergrande and its bondholders earlier this week signed non-disclosure agreements in preparation for potential talks about managing developer’s debt load, Bloomberg earlier reported. The ad hoc bondholder group’s advisers are seeking to exchange information with the company in what’s often a first step toward negotiations for an overall restructuring deal. 

The payment buys more time for Evergrande as it tries to raise funds through asset sales. Chinese authorities have already begun laying the groundwork for a potential restructuring, assembling accounting and legal experts to examine the finances of the group.

Authorities have told Evergrande’s billionaire founder to use his personal wealth to alleviate the property giant’s debt woes. The directive adds to signs that Beijing is reluctant to orchestrate a government rescue even as crisis spreads to other developers, sours sentiment in the real estate market and threatens to roil the world’s second-largest economy. A top Chinese regulator this week called on companies to make “active preparations” to meet payments on their offshore bonds

The New York Times earlier reported on the coupon payment. 

(Updates with additional information throughout.)

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