Now DMSA is preparing bankruptcy proceedings against Evergrande and calls on all bond investors to join it.Ĭhina Evergrande Group, the second largest real estate developer in China, defaulted on interest payments on two bonds back in September, with the 30-day grace period still ending in October. DMSA itself is invested in these bonds and has not received any interest payments until today's end of the grace period. 10, 2021 /CNW/ - China Evergrande Group today again defaulted on interest payments to international investors. "In the event of a liquidation, however, Chinese and global investors could decide that the contagion could spread beyond China," he said.BERLIN, Nov. In either case, investors in the company's financial instruments would likely suffer some losses, he wrote. "The company could restructure its debts but continue in operation, or it could liquidate," wrote Paul Christopher, head of global market strategy at Wells Fargo Investment Institute. Some analysts say it could take weeks for investors to have any clarity about how the Evergrande situation will resolve. Underscoring the scramble to avoid contagion, Chinese Estates Holdings, Evergrande's second-biggest shareholder, said on Thursday it had sold $32 million of its stake and planned to sell the rest. 16 that it had cut its 2021 economic growth forecast for China to 8.1% from 8.4%, citing the impact of the slowdown in the country's property sector on domestic demand. Switzerland's central bank, however, warned on Thursday that while it was wrong to be alarmist, the issue should not be dismissed as a small, local problem.įitch Ratings said on Sept. Federal Reserve Chair Jerome Powell said on Wednesday that Evergrande's problems seemed particular to China and that he did not see a parallel with the U.S. Once those priorities had been met, Evergrande would talk to its other creditors, he said, adding: "Otherwise a few hundred thousand people will fight with the government." Oscar Choi, founder and chief investment officer at Oscar and Partners Capital Ltd, said Evergrande was wary of enflaming social tensions by leaving homes unbuilt, construction workers unpaid and retail investors counting their losses. Shares in EvergrandeProperty Services rose nearly 8% and relief spread to mainland property stocks listed in Hong Kong.Ĭountry Garden, China's largest developer, climbed 7%, Sunac China jumped 9% and Guangzhou R&F Properties ended 7.5% higher. Shares in Evergrande rose nearly 18% on Thursday after it resolved the coupon payment for one of its domestic, onshore bonds, though the stock is still down more than 80% this year. we think the retail investor nature of the wealth management products would be prioritised for social stability," said Ezien Hoo, credit analyst at OCBC Bank.įoreign investors, who hold paper issued by Evergrande's offshore entities, might find it harder to get paid as they had "lower bargaining power versus other lenders closer to the assets", he said. "Assuming this situation goes the way of a debt restructuring. There is mounting pressure on the company to act as the frustration of homebuyers and retail investors who have sunk their savings into its properties and products grows. Investors worry that the rot could spread to creditors including banks in China and abroad, though analysts have been downplaying the risk that a collapse would result in a "Lehman moment", or a systemic liquidity crunch. The company, China's second-biggest property developer, has $83.5 million in dollar-bond interest payments due on Thursday on a $2 billion offshore bond and a $47.5 million dollar-bond interest payment due next week.īoth bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.Ī company spokesperson did not immediately respond to request for comment on its payment obligation due on Thursday.Įvergrande, which epitomised the borrow-to-build business model and was once China's top-selling developer, ran into trouble over the past few months as Beijing tightened rules in its property sector to rein back debt levels and speculation.Īlso Read | Gucci bags and Dyson appliances: How Evergrande lured in thousands of retail investors
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