In recent days a group of Chinese officials have tried to reassure investors
China Evergrande Group (3333.HK) remitted funds to a trustee account on Thursday for dollar bond interest payments due on September 23, a source told Reuters on Friday, ahead of a deadline that sent the embattled developer a formal official. Will have dipped in default.
The source confirmed a story Friday in the state-backed Securities Times that the company had paid $83.5 million in coupon payments to a trustee account with Citibank on Thursday, allowing it to pay all bond holders before the grace period ends. allows for. 23.
“They avoid short-term default and it is a bit of a relief that they have managed to find liquidity,” said a Hong Kong-based restructuring lawyer representing some bondholders.
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“But still, Evergrande needs to restructure its debt. This payment could be a way for them to do some sort of buy-in with stakeholders before the heavy work required on restructuring.”
Evergrande did not immediately respond to a Reuters request for comment. Citi declined to comment.
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In recent days, a group of Chinese officials have tried to reassure investors by saying that the interests of creditors will be protected. Yet market participants expressed surprise at the payment news. read more
“This is a positive surprise,” said James Wong, portfolio manager at Gaoteng Global Asset Management Ltd. Many expected the default.
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The news will boost bondholders’ confidence, he said, adding, “There are many coupon payments ahead. If Evergrande pays this time, I don’t see why it won’t pay off next time.”
Evergrande missed two coupon payments on its dollar bonds on September 23 and September 30, starting the clock on a 30-day grace period for payments. Non-payment of interest for 30 days will result in a formal default by the company, and will trigger cross-default provisions for other Evergrande Dollar bonds.
Evergrande’s dollar bonds rose on Friday morning, with its April 2022 and 2023 notes jumping more than 10%, according to data provider Period Finance.
A day after resuming trading after a suspension of more than two weeks pending the announcement of the sale of a scrapped stake in its asset management unit, shares of Evergrande rose nearly 4%.
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