Finance

Evergrande onshore unit says it will pay bond interest on time

An onshore unit of China Evergrande Group said on 22 September it would make an interest payment on time this week, as investors wait to see if the debt-ridden conglomerate makes a separate payment due on dollar bonds that it is expected to miss.

The unit, Hengda Real Estate Group, will pay 232 million yuan, or the equivalent of about $35.9m, of interest on its 5.80% September 2025 bond on 23 September, the company said in a stock-exchange filing.

Global investors have been watching Evergrande closely, fearing that defaults from one of China’s biggest developers could create contagion risks and cause trouble in the broader market. Earlier this week, worries about spreading troubles from China’s property sector snapped an extended streak of calm in stock markets and sent the S&P 500 down to its worst day since May.

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The turmoil has pushed Evergrande’s Hong Kong-listed shares to multiyear lows, while its dollar bonds have recently traded at deeply distressed prices of about 25 cents on the dollar.

Offshore investors are waiting to see if Evergrande makes a coupon payment that is due on one of its dollar bonds on 23 September.

Declining contracted sales, delayed asset-disposal plans and Beijing’s tight policies on the property sector have all contributed to concerns about Evergrande’s liquidity. Last week, the company said it hired financial advisers, potentially moving it closer to a restructuring.

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In a memo to employees on 21 September, Evergrande Chairman Hui Ka Yan said he expects the company’s troubles will pass and it will deliver the homes that it has promised.

This article was published by Dow Jones Newswires

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