Evergrande gets break on bond payment

Vote to defer interest for six months gives indebted developer a chance to sell off assets

China Evergrande Group’s bondholders have agreed to defer interest payments on yuandenominated bonds for six months, giving the heavily indebted developer more time to overcome its liquidity crisis.

The mainland developer gained investors’ approval to extend to November 6 the interest payments on two onshore bonds totalling 20 billion yuan (HK$23.8 billion) due on May 6, according to a filing to the Shanghai Stock Exchange.

Evergrande had issued a 15 billion yuan, four-year bond carrying an interest rate of 6.27 per cent and a 5 billion yuan, five-year note with a coupon of 6.8 per cent on May 6, 2019.

In its meeting with bondholders on April 28 and 29, more than 99 per cent voted on a motion to revise the interest payment arrangement, the company said in the filing.

The six months of breathing space offers some relief to Evergrande, which still has 1.97 trillion yuan in liabilities, to offload assets to address its liquidity crisis.

The developer offered 2,000 completed homes in 10 cities, half of them in the Pearl River Delta, for sale during the Labour Day holiday.

Chaired by Hui Ka-yan, the firm also launched a marketing campaign on April 30 to cash in on what is traditionally a golden week for property sales in China.

The properties on offer included villas, flats, serviced apartments and shops at Evergrande’s 400 projects across the nation, a company spokeswoman said last week, without disclosing further details.

Meanwhile, investors were concerned about the credit risk of mainland companies, with yields on both onshore and offshore bonds being driven up by the property industry, investment bank Natixis said in an online briefing yesterday.

The sector had the most bond repayment problems, including technical defaults and extensions, as of March, Natixis analysts said.

They noted that the average yield on offshore bonds inched up to 6.8 per cent in March from 6.4 per cent at the end of 2021 due to repayment pressure on the industry.

“The main concern for investors is still in the property sector, especially the private industry players,” said Gary Ng, a senior economist for Asia-Pacific at Natixis.