China: Evergrande close to default after non-payment of bond coupons – archyde

by Clare Jim, Scott Murdoch and Andrew Galbraith

HONG KONG / SHANGHAI (Reuters) – Evergrande failed to honor bond coupon payments after a one-month grace period expires, sources familiar with the matter told Reuters on Tuesday, which would put the giant Chinese real estate in default.

The group was to pay some 82.5 million dollars (73.3 million euros) at the end of a 30-day grace period but no bondholder had received a coupon payment on Tuesday, a source said.

Four other sources holding the bonds confirmed that they had not received payment.

“The magnitude of the interest payments … made this (default) situation seemingly inevitable,” said one bondholder, who requested anonymity.

Evergrande did not respond to Reuters’ request for comment.

Evergrande was China’s leading real estate developer, with more than 1,300 real estate projects in the country. But with $ 300 billion in debt, he now finds himself at the heart of a real estate crisis which has already swept through a dozen smaller companies this year.

Beijing has repeatedly said that Evergrande’s problems can be brought under control. The measures taken to increase liquidity in the banking sector and the group’s efforts to reduce its debt have for a time reassured global investors.

But Evergrande announced on Friday that it could not guarantee sufficient funds to honor its debt repayments, prompting Chinese authorities to summon the chairman of the group.

Adding to the crisis, Kaisa Group Holdings should not be able to meet the deadline for repayment of its offshore debt of $ 400 million on Tuesday, according to a source.

Kaisa, who in 2015 became the first Chinese developer to default on an offshore bond, declined comment.

(Reporting Clare Jim and Scott Murdoch in Hong Kong, Karin Strohecker in London and Andrew Galbraith in Shanghai; French version Laetitia Volga, edited by Nicolas Delame)