Evergrand Real Estate Group Update
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Chinese markets fell after their first trading day this week after a public holiday as concerns over global markets grew over the possible default of property developer Evergrand on the repayment of an international bond.
But the real estate company, which has a total liability of more than ০০ 30,000 billion, said the losses were not as serious as it had feared, saying Thursday’s payment for an unsecured renminbi-dominated bond had “already been resolved through off-exchange negotiations”.
The benchmark CSI index00 index of Shanghai- and Shenzhen-listed stocks initially recovered from a dip of about 2 percent, falling 0.6 percent in afternoon trading. The CSI Real00 real estate index rose 5 percent.
Evergrand will have to pay Rmb232m (35.8m) in interest for the maturity of the Anishore bond in 2025. Thursday for an offshore, dollar-denominated note that matures the following year. The bond traded around 26 cents in dollars this week, reflecting expectations of impending default.
Concerned that the company will default on offshore bonds sparked widespread tensions in global markets this week, with Wall Street experiencing the worst trading day since May on Monday.
Shares rose elsewhere in Asia on Wednesday in hopes that Evergrand could reach a similar arrangement with its international bondholders.
The futures of the S&P 500 moved from loss to profit after the announcement of the onshore bond agreement, when Tokyo’s benchmark topics fell 0.7 percent from a sharp drop that traders called a “cautious relief” wave.
Analysts have blamed shore investors for having more time to digest developments in the vicinity of Evergrand due to the limited fall in Chinese shares, with last-minute reassurances softening concerns over a default.
Bruce Pang, head of research at investment bank China Renaissance, said: “The latest announcement only proves the government’s efforts to stabilize the situation and prevent errors.” He added that Beijing is much more concerned about the onshore default and could force issuers and domestic bondholders to negotiate a deal.
“The government has more to say about the development of onshore bonds – they can consolidate the arrangements [with bondholders] And payments work much easier than offshore bonds, ”Pang said.
Traders said Thursday’s deadline for making payments on Evergrand’s offshore bonds is likely to be missed, but the company could avoid formal defaults with offshore bondholders within the 30-day grace period after the payment deadline.
“They will probably negotiate,” said Evergrand, an investor in the developer’s Chinese Inn. . . [the] In the same way, they are with onshore coupons. “
Tokyo traders said that despite encouraging headlines from China, the shares were unlikely to make much gains as uncertainty over Evergrand’s fate continued and the fate of coupon payments on offshore bonds remained unknown.
Markets in Hong Kong, where shares of Evergrand fell below 7 percent on Tuesday before the volume of losses fell to 0.5 percent, were closed for a public holiday. The stock has fallen about 85 percent this year.
Additional report by Leo Lewis in Tokyo
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