Evergrande pushes the specter of default away. The Chinese real estate giant announced that it has reached an agreement with bondholders to pay interest on the debt. In a statement published by the Shenzhen Stock Exchange, the company – exposed for about 260 billion euros – explained that one of its subsidiaries, Hengda Real Estate, has negotiated a plan to repay interest on a bond maturing in 2025.
According to Bloomberg, Evergrande would repay 232 million yuan (30.5 million euros) of debt maturing Thursday on this 5.8% bond destined for the domestic bond market.
On the markets, there is a lot of fear of seeing a collapse like that of Lehman Brothers in 2008 and for this reason the Chinese central bank (PBOC) has injected 120 billion yuan (18.6 billion dollars) into the financial system through buybacks. (‘reverse repo’), exceeding 30 billion yuan of current maturities, to face Evergrande’s financial crisis.
Meanwhile, the deal with domestic bondholders should allow Evergrande to avoid default, but nothing is yet known about the interest of 83.5 million on a 5-year issue maturing in March 2022 denominated in US dollars, with a size of initial issue of approximately 2 billion.
Another 47.5 million of interest is due on September 29 for a March 2024 issue. In its statement, Hengda noted that investors “who bought and held the bonds” before September 22, 2021 “are entitled to payment of the bonds. interests “. Evergrande, despite its 200,000 employees and 3.8 million other related employees, is facing “unprecedented challenges” due to its massive debt of $ 305 billion.