China’s Evergrande Group was reportedly successful in making interest payment for an international bond whose grace period was slated to end on Friday, October 29. The timely payment of interest deflected the group from a cataclysmic default for the second time in a week by a small margin.
The property developer had evaded a default last week by a hair’s breadth by securing $83.5 million for interest payment on a bond. It was then required to make coupon payments worth $47.5 million to bondholders by Friday.
A failure to make the payment by the deadline on Friday would have set off cross-defaults on all of the company’s bonds worth over $19 billion in the offshore market, resulting in the world’s second-largest emerging corporate debt default.
Evergrande Group is currently grappling under liabilities worth more than $300 billion, sparking concerns about the consequence of its moves on China’s economy as well as the global market.
The source of the funds used by the company to make the interest payment before the deadline was not disclosed. However, Bloomberg had earlier reported that Chinese authorities had urged Evergrande’s founder Hui Ka Yan to pay the company’s debt with his personal wealth.
Shares of the Evergrande group fell 0.8 per cent by midday on Friday, as compared to a 0.3 per cent decline in the Hang Seng Index. Meanwhile, the Hang Seng Mainland Properties Index was down about 0.9 per cent while an index of developers’ mainland A-shares dropped by 3.6 per cent.
Evergrande had earlier failed on making coupon payments worth nearly $280 million on its dollar bonds on September 23, September 29 and October 11, which activated a 30-day grace period for each payment. The developer still needs to make offshore coupon payments worth $338 million that are due in the months of November and December.
