China Evergrande investors left in dark after payment deadline passes
Global News
Evergrande's shares handed back some Thursday gains on Friday and fell 13 per cent, while stock of its electric-vehicle unit dropped 20 per cent to a four-year low.
China Evergrande has left global investors guessing over whether it will make a key interest payment, adding to fears that Beijing will let overseas bondholders swallow large losses as a liquidity crisis deepens at the world’s most indebted property company.
Evergrande owes US$305 billion, has run short of cash and investors are worried a collapse could pose systemic risks to China’s financial system and reverberate around the world.
A Thursday deadline for paying US$83.5 million in interest of a dollar bond passed without remark from Evergrande, and bondholders had not been paid nor heard from the company, two people familiar with the situation told Reuters.
The firm has a 30-day grace period and will default if that passes without payment.
Evergrande’s silence on the dollar bond interest payment and another US$47.5 million payment due next week contrasts with its treatment of its domestic investors. The company this week resolved one coupon payment on a domestic bond.
“This is part of the tactics of any sovereign driven restructuring process – keeping people in the dark or guessing,” said Karl Clowry, a partner at Addleshaw Goddard in London.
“The view from Beijing is offshore bondholders are largely Western institutions and so can justifiably be given different treatment. I think people think it’s still a falling knife.”
China’s central bank again injected cash into the banking system on Friday, seen as a signal of support for markets. But authorities have been silent on Evergrande’s predicament and China’s state media has offered no clues on a rescue package.
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