Home » Evergrande’s bond trading temporarily suspends trading in the industry: sell-off and then upgrade | Bonds fall | Debt default

Evergrande’s bond trading temporarily suspends trading in the industry: sell-off and then upgrade | Bonds fall | Debt default

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[Epoch Times September 4, 2021](Epoch Times reporter Liu Yi comprehensive report) On September 3, trading of Evergrande bonds was temporarily suspended due to a decline of more than 20%. Some people in the industry said that the market was worried about Evergrande’s debt, and the sharp sell-off of Evergrande stocks and bonds escalated again.

Based on news from the mainland, Hong Kong and Taiwan media, on September 3, the Shanghai Stock Exchange announced that there were abnormal fluctuations in trading on the morning of “15 Evergrande 03” on the 3rd. According to relevant regulations, the Exchange has decided to suspend trading at 9:33 on September 3 and resume trading at 10:3 on September 3.

On the disk, Evergrande Real Estate’s bonds fell sharply. “15 Evergrande 03” fell by more than 22%, “19 Evergrande 02” fell by more than 16%, and “20 Evergrande 01” fell by more than 13%.

The Shenzhen Stock Exchange (SZSE) announcement also stated that in early trading, the company’s bonds were once unable to be traded due to a decline of more than 20% of the single-day limit.

After the resumption of trading, the trend of Evergrande bonds remained weak. “15 Evergrande 03” finally closed at 54.9 yuan, a decrease of 5.88%; “20 Evergrande 01” closed down to 6.3%, to 65 yuan.

Evergrande is China’s most indebted real estate developer and one of China’s largest borrowers in the international market. Some analysts believe that the Evergrande Group’s liquidity crisis and the tight capital chain have caused the stocks and bonds of Evergrande to fall.

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The Financial Times reported on the 3rd that Evergrande’s bond decline showed that the recent sharp sell-off of Evergrande’s stocks and bonds has escalated again.

The report quoted Agnes Wong, an analyst at BNP Paribas, as saying: “People saw the company admit that it had a debt default risk, and then the market panicked.” She believes that Evergrande needs to move quickly to dispose of its assets.

Last year, trading of some Evergrande bonds on the Shanghai Stock Exchange was also suspended because of problems with the listing of a subsidiary of Evergrande, which caused concerns about the shortage of Evergrande’s cash.

Some analysts also believe that China Chengxin International, the largest rating agency in mainland China, lowered the credit rating of Evergrande real estate entities and related debts under the Evergrande Group from AAA to AA and included it on the watch list for possible downgrade.

On the 2nd, China Chengxin classified the credit ratings of Evergrande Real Estate as well as “15 Evergrande 03”, “19 Evergrande 01”, “19 Evergrande 02”, “20 Evergrande 01”, “20 Evergrande 02”, and “20 Evergrande”. The 9 bond credit ratings of “Da 03”, “20 Evergrande 04”, “20 Evergrande 05” and “21 Evergrande 01” were simultaneously lowered from “AAA” to “AA”, and the credit ratings of entities and debts were included A watch list that may be downgraded.

In explaining the reasons for the downward adjustment, China Chengxin stated that the increase in litigation matters between Evergrande Real Estate and its suppliers, the suspension of some projects and the proposed sale of assets indicate that Evergrande Real Estate and Evergrande Group’s cash flow tightness has further intensified, and their profitability has deteriorated significantly. , The uncertainty of Evergrande Real Estate’s debt renewal and repayment has increased significantly. If assets, equity sales, loan renewals, extensions and other matters do not progress as expected in a certain period in the future, Evergrande Real Estate and Evergrande Group may further increase the liquidity pressure.

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The Financial Times reported that Evergrande’s securities fell sharply this week. The current price of an offshore bond maturing in 2025 is 26 cents per US dollar, which is much lower than the previous lowest price. The current price of another bond maturing in 2026 is 35 cents per dollar, and the price at the end of May is still close to face value.

Not only is the market worried about Evergrande’s debt default, the Chinese Communist Party also interviewed Evergrande executives in August to publicly urge the company to resolve its debt problems. In August, S&P Global Ratings downgraded Evergrande’s credit rating to CCC, sliding further into the speculative level.

“The Wall Street Journal” reported on September 3 that as of June, Evergrande’s payables and contract liabilities totaled $180 billion.

However, commentator Wang Jian said that Evergrande has a lot of debts with “real stock debts”. Because Evergrande was not allowed to increase its debts, Evergrande adopted the method of attracting investors to invest in shares, and then signed an agreement for a year or more. Years later, Evergrande bought back this part of the shares at the interest rate and no one knows how much of this part of the debt. Therefore, Evergrande’s real debt is unknown.

On August 31, Evergrande stated that if the company fails to attract new investors to inject capital, it is very likely that there will be a debt default.

Some financial institutions have urged Evergrande to repay its debts. Bloomberg News quoted information disclosed by people familiar with the matter as saying: Two trust companies among Evergrande’s major non-bank creditors require them to “immediately” repay certain loans.

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Editor in charge: Li Qiong

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