Evergrande misses latest bond payment deadline - reports
Troubled Chinese property developer Evergrande has missed another round of bond payments, it was reported on Tuesday.
The heavily-indebted group was due to make interest payments totalling $148m on dollar-denominated April 2022, April 2023 and April 2024 notes by midday in Hong Kong on Tuesday.
But according to multiple media reports, including the Financial Times and Reuters, a number of bondholders said they had not received any funds. Evergrande has so far not commented.
The missed payments weighed on Asian stocks, with markets unnerved that other similarly cash-strapped property developers will also struggle to make payments. On Monday, Hong Kong-listed developer Modern Land asked investors for more time to pay back a $250m bond, due at the end of this month, as it sought to improve "liquidity and cash flow management, and to avoid any potential payment default". Smaller rival Fantasia missed a $206m payment at the start of the month.
In a note, brokerage CGS-CIMB said: "We see more defaults ahead if the liquidity problem does not improve markedly."
Property developers in China borrowed heavily to build portfolios. But Beijing, concerned that the country’s booming real estate market was overheating, has tightened the rules controlling the amount owed by developers.
Evergrande is the biggest and most indebted of the country’s developers, with debts of more than $300bn. Tuesday’s missed deadline follows a $83.5m missed payment last month on an overseas bond, although it has struck a deal with investors over another due payment of $35.9m. Last month it sold part of its stake in Shengjing Bank for $1.5bn, but the funds were used to settle its liabilities with the bank.
Russ Mould, investment director at AJ Bell, said: "The Evergrande saga continues to rumble on, with reports that some bondholders didn’t receive interest payments.
"These payments have knocked investor confidence once again, leading to a 1.7% drop in the Hang Seng Index in Hong Kong, with financials, technology and healthcare among the worst performing sectors."