- Evergrande Group is due to make a large bond coupon payment of C$150 million on Wednesday.
- Sources tell Reuters that some bondholders have not received coupon payments.
- A 30-day grace period expires Wednesday, which would mean a default.
Evergrande Group (3333.HK) (EGRNF) is about to step back into the limelight on Wednesday as rumours swirl that it has defaulted on some bond payments. The stock caused a serious sell-off in global equity markets about a month ago, but investors banked on it being too big to fail and that China would step in to limit contagion effects. Well, that theory may need more examining today as Reuters reports that offshore debt may be about to be defaulted on.
Evergrande Group news
Evergrande Group was never out of trouble, but the company now looks to have defaulted on overseas bonds, which would be more of a serious hit to global financial markets and a stronger warning signal of contagion. Other property developers in China have been struggling to meet debt obligations as the sector looks to be in increasing trouble. China has staged high-level meetings to try and avert the crisis including possible backing from state companies. However, a default on overseas debt would be a much bigger hit reputationally and see investors' concerns elevated. Evergrande Group has about $300 billion in debt. Companies can miss debt repayments, but they have 30 days to catch up essentially. Once that 30 days is over then the company is said to have defaulted.
The US Federal Reserve on Tuesday already had raised concerns with the Chinese property sector as issues spread to other developers. Fantasia Holdings Group stock cratered by up to 50% on Wednesday as Fantasia said there is no guarantee it will be able to meet its financial obligations following its failure to meet a payment deadline on October 4.
Fantasia Holdings Group graph, daily
S&P downgraded Shimao Group holdings on Wednesday also. Kaisa Group (1638.HK) said last week it had missed a payment, and sources told Reuters on Tuesday that Kaisa had requested help to meet payments. Fitch downgraded Kaisa.
Evergrande Group daily chart
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