ছবি Photo from Reuters file: 1 vehicle A vehicle drives unfinished residential buildings at Evergrand Oasis, a housing complex developed by the Evergrand Group in Luang, China in September, 2021.
NEW YORK / HONG KONG (Reuters) – The main unit of China Evergrand Group said on Wednesday it would pay off a bond coupon on Sept. 2, giving some relief to the volatile market on fears of China’s No. 2 default. Developers can spread through the global financial system.
U.S. stock futures, the yuan and the risk-sensitive Australian dollar rose, while safe-haven assets such as the yen and U.S. treasuries declined.
Hengda Real Estate Group said in a statement that it would make coupon payments on its Shenzhen-traded 5.8% September 2025 bond on September 23rd.
The announcement comes as the country’s top-selling developer, Evergrande, announces an inch grand near the key deadline for interest payments on dollar bonds, even as investors and analysts downplay the threat of the country’s problems becoming “Lehman”. Moment. ”
According to refinance data, the coupon payment of Hengda Real Estate totaled 232 million yuan ($ 35.88 million).
Evergrand’s onshore exchange-traded bonds have been closed since September 16, when Hengda Real Estate applied for a one-day suspension of trading. When technically resuming trading on September 17, it now only happens through the transactions in question that traders said were attempts to prevent instability.
U.S. stocks were flat on Tuesday and Chinese shares fell sharply after a two-day public holiday, despite concerns about a sharp fall from Monday. But China’s property index subsequently recovered losses and was above %%, while banking stocks were down nearly %%.
Evergrand is so deeply involved with China’s wider economy – from retail investors to infrastructure-related companies that measure global commodity demand – that the risk of infection has put financial markets on tentacles.
Analysts at New York-based Bespoke wrote in a research paper on Tuesday, “There is a general concern about the possibility of infection.” “But so far those concerns have not been seen in some parts of the credit market that have served as a red flag for the larger credit crisis in the past.”
Evergrand is ready to pay its onshore bonds on time, but the developer did not indicate whether it would be able to pay 83 83.5 million in interest on Thursday due to its March 2022 bond. It has an additional 5 5.5 million payment for the 2nd September, 20224 note.
If Evergrand fails to settle interest within 30 days of the due payment date, both bonds will default.
Evergrand has failed to pay interest to at least two of its largest bank credit payers, according to Bloomberg https://www.bloomberg.com/news/articles/2021-09-21/evergrande-misses-loan-payments-to-banks- As Tuesday-Bond-Deadline-Loom with quotes from acquaintances. According to Bloomberg, the Chinese Ministry of Housing said the company was unable to make timely payments and missed payments were expected.
As global investors and policymakers try to assess a possible fall, Gary Gensler, chairman of the Securities and Exchange Commission (SEC), said the U.S. market is in a better position to absorb potential global shocks from a large company default before 2007. -2009 financial crisis.
Fed Chair Jerome Powell will probably be asked about the consequences of Evergrand when he speaks after the Fed’s two-day meeting, which ends Wednesday at 2 p.m. (1800 GMT).
Despite growing defaults, some funds have been increasing their position in recent months. Fund giant BlackRock (NYSE 🙂 and investment bank HSBC and UBS Evergrand are among the biggest buyers of debt, Morningstar https://www.morningstar.hk/hk/news/215418/whos-buying-evergrandes-bonds.asp? lang = en-hk showed data and a blog post.
Other bondholders include UBS Asset Management and Amundi, Europe’s largest asset manager.
In any default situation, Evergrand, Teetering is less likely to have a managed fall or a bailout in Beijing, bonds need to be restructured, but analysts expect a lower recovery ratio for investors.
The S&P Global (NYSE 🙂 rating said Monday that it believes the Chinese government will only take action in the event of a far-reaching transition to the economy that creates systemic risks.
“I would identify Evergrand as a telegraph and controlled explosion,” said Sami Muadi, portfolio manager at the 5.1 billion T-Row Price Emerging Markets Bond Fund, which has no position in the company.
The BNP Paribas (OTC) estimates in a study that less than ৫০ 50 billion of Evergrand’s outstanding ০০ 100,000 billion is financed by bank loans, which will be a sufficient buffer to exploit potentially bad absorption in the Chinese banking sector.
Citigroup Inc. (NYSE 🙂 affiliates act as trustees and payment agents for a China Evergrand Bond that matures in March 2022 and is coming in at 83 83.5 million in interest on Thursday.
Citigroup spokesman Daniel Romero-Epsilos said in an email on Tuesday, “We have no exposure to direct nding in Evergrande; our indirect exposure through counterparty credit risk is small and there is no single significant concentration.” He declined to comment on Evergrand’s payment.
In an effort to restore confidence in the organization, Evergrand chairman Hui Ka said in a letter to staff that Evergrand would be responsible to property buyers, investors, partners and financial institutions.
Evergrand’s Hong Kong-listed shares fell as much as 7% on Tuesday, down 10% from the previous day, fearing that its 30 305 billion debt collapse could cause massive damage to China’s financial system. Hong Kong’s stock market was closed for the holiday on Wednesday.