Tuesday, September 21, 2021, living in Venice Real Estate and Life of China Evergrand Group in tourism development in Kidong, Jiangsu Province, China.
Kilai Shen | Bloomberg | Getty Images
Ahead of another interest payment deadline, Chinese developer Evergrand announced that it would sell 1.5 1.5 billion (9.99 billion yuan) worth of shares in Shenzhen Bank to a state-owned asset management firm.
The property giant, which has a debt burden of more than 300 300 billion, is struggling to raise funds on Wednesday as it faces a 47 47.5 million bond interest repayment deadline on Wednesday. Distressed real estate pays to giant banks and suppliers.
In a filing on the Hong Kong Exchange on Wednesday morning, Evergrande said it had reached an agreement to sell 1.75 billion shares in Shenyang Bank to Shenyang Shenzhen Finance Investment Group for 5.70 yuan per share. These shares account for 19.93% of the bank’s issued share capital.
Evergrand had previously disposed of 1 billion yuan worth of shares in Shenzhen Bank.
In a statement, Evergrande said its liquidity problems had already “adversely affected” Shenzhen Bank in a material way. The bank’s activities will be “stabilized” if the state-owned Shenyang Shenzhen Finance Investment Group introduces the buyer, Evergrande said.
Shares of Evergrand rose nearly 10% in Hong Kong in the first trading session on Wednesday morning.
Another bond pays interest on Wednesday
Evergrande has been silent on payments due last week, with no announcement yet.
However, the company will not technically default unless it fails to make that payment within 30 days of the due date.
Markets are watching closely to see if the company will pay the next ারের 5.5 million in interest on Wednesday for a 1 billion bond to mature in March 2024.
With investors exiting Evergrand bonds and prices falling, the yield on these 7-year bonds has risen by 90%, from just 14% earlier this year. Yield moves in the opposite direction from price.
For the rest of the year, Evergrand pays interest in October, November and December each month.
Analysts say the company may give preference to domestic investors, who are the main holders of foreign bonds – to foreign investors, who carry the most offshore debt.