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China Evergrande shares halted, set to release ‘inside information’

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HONG KONG, Jan 3 (Reuters) – China Evergrande Group (3333.HK) shares will be suspended from trading on Monday pending the release of “inside information”, the embattled property developer said without elaborating.

Evergrande, the world’s most indebted developer, is struggling to repay more than $300 billion in liabilities, including nearly $20 billion of international market bonds that were deemed to be in cross-default by ratings firms last month after it missed payments.

The property developer missed new coupon payments worth $255 million due last Tuesday < VG162759965=>, though both have a 30-day grace period. read more

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The firm has set up a risk management committee with many members from state companies, and said it would actively engage with its creditors. read more

Local media reported over the weekend a city government in the Chinese resort island of Hainan had ordered Evergrande on Dec. 30 to demolish its 39 residential buildings within 10 days, due to illegal construction.

The buildings stretched over 435,000 square meters, the reports added, citing an official notice to Evergrande’s unit in Hainan.

Evergrande did not respond to request for comment on the Hainan development.

On Friday, Evergrande dialled back plans to repay investors in its wealth management products, saying each investor in its wealth management product could expect to receive 8,000 yuan ($1,257) per month as principal payment for three months irrespective of when the investment matures. read more

The move highlights the deepening liquidity squeeze at the property developer.

“The market is watching the asset disposal progress from Evergrande to repay its debt, but the process will take time,” said Conita Hung, investment strategy director at Tiger Faith Asset Management.

“And the demolition order in Hainan will hurt the little homebuyer confidence remained in the company.”

Evergrande said last week 91.7% of its national projects have resumed construction after three months of effort. Many projects were halted previously after the developer failed to pay its many suppliers and contractors. read more

Shares of Evergrande shed 89% last year, closing at HK$1.59 on Friday.

Its EV unit China Evergrande New Energy Vehicle Group (0708.HK)reversed early losses to rise 6% by late morning trades on Monday, while property management unit Evergrande Services (6666.HK) declined 3%.

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Reporting by Clare Jim; Editing by Tom Hogue & Shri Navaratnam

Our Standards: The Thomson Reuters Trust Principles.

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China Evergrande shares fall after missing new coupon payments

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The China Evergrande Centre building sign is seen in Hong Kong, China December 7, 2021. REUTERS/Tyrone Siu/File Photo

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HONG KONG, Dec 30 (Reuters) – Shares of China Evergrande Group (3333.HK) tumbled on Thursday after the embattled real estate developer did not pay offshore coupons due earlier this week.

Evergrande, whose $19 billion in international bonds are in cross-default after missing a deadline to pay coupons earlier this month, had new coupon payments worth $255 million due on Tuesday for its June 2023 and 2025 notes. ,

At least some investors holding the two bonds have not yet received the coupons, according to three sources with knowledge of the matter. Both the payments have a 30-day grace period.

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Evergrande’s shares ended down 9.1% on Thursday, while the benchmark Hang Seng index (.HSI) edged up 0.1%.

Bloomberg News reported earlier that the due date passed with no sign of payment by the property developer.

Evergrande’s Thursday decline wiped out gains from earlier this week, when the market cheered the initial progress made by the firm in resuming construction work.

Company Chairman Hui Ka Yan vowed in a meeting on Sunday to deliver 39,000 units of properties in December, compared with fewer than 10,000 in each of the previous three months. read more

“(The non-payments) show Evergrande is still not doing okay even though it is delivering homes,” said Thomas Kwok, head of equity business of CHIEF Securities in Hong Kong.

The market confidence in Evergrande and the China property sector is weak, as there could be more defaults with many bonds due in January, Kwok added.

Evergrande has more than $300 billion in liabilities and is scrambling to raise cash by selling assets and shares to repay suppliers and creditors.

The fate of Evergrande and other indebted Chinese property companies has gripped financial markets in recent months amid fears of knock-on effects, with Beijing repeatedly seeking to reassure investors.

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Editing by Richard Pullin, Stephen Coates, Shounak Dasgupta and Neil Fullick

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China Evergrande shares hit new low amid debt crisis; Kaisa misses pay date

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The logo of China Evergrande Group is seen on the property developer’s headquarters in Shenzhen, Guangdong province, China, Sept. 26, 2021. REUTERS/Aly Song/File Photo

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  • Hopes of debt restructuring keep floor under Evergrande shares
  • Evergrande has not yet confirmed default
  • ‘Market will want to wait and see and not give up yet’ -analyst
  • Trading in shares of Kaisa suspended

HONG KONG, Dec 8 (Reuters) – China Evergrande Group’s shares hit a record low on Wednesday after a missed debt payment deadline put the developer at risk of becoming the country’s biggest defaulter, even as hopes of a managed debt restructuring calmed fears of a messy collapse.

So far, any Evergrande (3333.HK) fallout has been broadly contained, and with policymakers becoming more vocal and markets more familiar with the issue, consequences of its troubles are less likely to be widely felt, market watchers have said.

Failure by Evergrande to make $82.5 million in interest payments due Nov. 6 on some U.S. dollar bonds would trigger cross-default on its roughly $19 billion of international bonds, with possible ramifications on China’s economy and beyond.

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While the 30-day grace period is over, Evergrande has not announced if the bonds have formally defaulted.

The developer did not immediately respond to a Reuters request for comment.

“Without the official announcement, the market will want to wait and see and not give up yet; otherwise Evergrande’s share and bond prices should have tumbled a lot more,” said Steven Leung, director of UOB Kay Hian in Hong Kong.

“The market also wants to wait and see what can be done with local government stepping in now,” Leung added, referring to the move by Evergrande’s home province to help contain the risk.

Evergrande was once China’s top property developer, with more than 1,300 real estate projects. With $300 billion of liabilities, it is now at the heart of a property crisis in China this year that has crushed almost a dozen smaller firms.

Trading in shares of embattled smaller peer Kaisa Group Holdings (1638.HK) was suspended on Wednesday, after a source with direct knowledge of the matter said it was unlikely to meet its $400 million offshore debt deadline on Tuesday. read more

Kaisa, China’s largest holder of offshore debt among developers after Evergrande, had not repaid the 6.5% bond by the end of Asia business hours, the person said, which could push the notes into technical default, triggering cross defaults on its offshore bonds totalling nearly $12 billion.

Kaisa declined to comment.

Bondholders owning over 50% of the notes in question sent the company draft terms of forbearance late on Monday, a source previously told Reuters.

Even in the case of a technical default, Kaisa and offshore bondholders would continue the discussions, two sources with knowledge of the matter said.

SHARES HIT RECORD LOW

Evergrande’s shares, which have given up more than 20% this month, were down 6% in the afternoon at HK$1.72 – lowest since their November 2009 debut. The broader market (.HSI) was steady.

Its notes due last month , one of two tranches with a coupon payment deadline that passed on Monday, traded at 18.613 cents on the dollar, Duration Finance data showed, versus 18.875 from the close of Tuesday Asia hours.

Kaisa’s bond due April 2022 traded at 36.397, little changed from the day earlier but down from 37.89 last week.

The government has repeatedly said Evergrande’s problems can be contained and moves to boost liquidity in the banking sector along with the firm’s plans to forge ahead with a restructuring of its overseas debt have helped reassure global investors.

The provincial government of Guandong, where Evergrande is based, stepped in last week to help manage the fallout, reinforcing the view that its failure would be managed.

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Reporting by Anne Marie Roantree and Donny Kwok; Editing by Himani Sarkar

Our Standards: The Thomson Reuters Trust Principles.

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Evergrande debt deadline passes with no sign of payment -sources

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The company logo is seen on the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song/File Photo

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HONG KONG/SHANGHAI, Dec 7 (Reuters) – Some offshore bondholders of China Evergrande Group (3333.HK) did not receive coupon payments by the end of a 30-day grace period, four people with knowledge of the matter said, pushing the cash-strapped property developer closer to formal default.

Failure to make $82.5 million in interest payments that were due last month would trigger cross-default on the firm’s roughly $19 billion of international bonds and put the developer at risk of becoming China’s biggest-ever defaulter – a possibility that has loomed over the world’s second-largest economy for months.

Once China’s top property developer, with over 1,300 real estate projects and $300 billion of liabilities, Evergrande has been the poster child of a property crisis in China this year that has already ripped down nearly a dozen smaller developers.

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The government has repeatedly said Evergrande’s problems can be contained and moves to boost liquidity in the banking sector along with the firm’s plans to forge ahead with a restructuring of its overseas debt have helped reassure global investors.

“The market already had certain expectations about this (non-payment)”, said strategist Kenny Ng at Everbright Sun Hung Kai Securities. It “just waited to see when this will happen”.

“At the same time, investors are watching the development of Evergrande, including whether it is heading for debt restructuring or its creditor repayment plan,” Ng said.

On Monday, the developer said it had established a risk-management committee that included officials from state entities to assist in “mitigating and eliminating the future risks”. read more

That came after it earlier said creditors had demanded $260 million and that it could not guarantee funds to repay debt. That prompted authorities to summon its chairman and reassure markets that broader risk could be contained. read more

So far, any Evergrande fallout had been broadly contained in China and with policymakers becoming more vocal and markets more familiar with the issue, consequences of Evergrande’s troubles are less likely to be widely felt, market watchers have said. read more

State involvement and hope of managed debt restructuring helped lift Evergrande stock as much as 8.3% a day after diving 20% to a record closing low. Still, it ended Tuesday up only 1.1% while its bonds continued to trade at distressed levels.

Notes due Nov. 6, 2022, – one of two tranches with a coupon payment deadline that passed Monday midnight in New York – traded at 18.282 cents on the dollar, Duration Finance data showed, little changed from a day earlier.

SELL OFF

Founded in 1996, Evergrande epitomised a freewheeling era of borrowing and building. That business model was scuttled, however, by hundreds of new rules designed to curb developers’ debt frenzy and promote affordable housing.

Evergrande became just one of a number of developers subsequently starved of liquidity, prompting offshore debt default and credit-rating downgrades, and a plunge in the value of developers’ stocks and bonds.

Smaller peer Kaisa Group Holdings Ltd (1638.HK) – China’s largest offshore debtor among developers after Evergrande – also risks defaulting on a $400 million bond maturing on Tuesday having failed to make a deal with bondholders.

To avoid an overall default, bondholders owning over 50% of the 6.5% notes due Dec. 7 sent Kaisa draft terms of forbearance late on Monday to work toward a solution, a person with direct knowledge of the matter old Reuters. Kaisa started discussing forbearance with bondholders last week, the person said.

Another person with direct knowledge said discussions are at preliminary stages and that it will take time to finalise terms.

The people declined to be identified as the information was confidential.

Responding to Reuters’ request for comment, Kaisa said it is open to discussion on forbearance, without elaborating.

Sources previously told Reuters that the bondholders, had offered Kaisa $2 billion in funding last month but that no major progress on the offer was made. read more

Shares of Kaisa – the first Chinese developer to default on an offshore bond in 2015 – rose 1.1% on Tuesday.

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Reporting by Clare Jim and Scott Murdoch in Hong Kong and Andrew Galbraith in Shanghai; Editing by Sumeet Chatterjee and Christopher Cushing

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China Evergrande braces for debt deadline after doubting ability to pay

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  • Evergrande says no guarantee it can make $82.5 mln debt payments
  • Says creditors have also demanded $260 mln repayment
  • Authorities summon chairman; shares drop 15% to 11-year low
  • Any collapse could ripple through property sector and beyond

HONG KONG, Dec 6 (Reuters) – After lurching from deadline to deadline, China Evergrande Group (3333.HK) is again on the brink of default, with pessimistic comments from the property developer raising expectations of direct state involvement and a managed debt restructuring.

Having made three 11th-hour coupon payments in the past two months, Evergrande will again face the end of a 30-day grace period on Monday, with dues this time at $82.5 million.

But a statement late on Friday saying creditors had demanded $260 million and that it could not guarantee enough funds for coupon repayment prompted authorities to summon its chairman – and wiped over a sixth off its stock’s market value on Monday.

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Evergrande was once China’s top-selling developer but is now grappling with more than $300 billion in liabilities, meaning a collapse could ripple through the property sector and beyond.

Its statement on Friday was followed by one from authorities in its home province of Guangdong, saying they would send a team to Evergrande at the developer’s request to oversee risk management, strengthen internal control and maintain operations.

The central bank, banking and insurance regulator and securities regulator also released statements, saying risk to the broader property sector could be contained.

Short-term risk from a single real estate firm will not undermine market funding in the medium or long term, said the People’s Bank of China. Housing sales, land purchases and financing “have already returned to normal in China”, it said.

Analysts said authorities’ concerted effort signalled Evergrande has likely already entered a managed debt-asset restructuring process to reduce systemic risk.

Morgan Stanley in a report said such a process would involve coordination between authorities to maintain normal operation of property projects, and negotiation with onshore creditors to ensure financing for projects’ development and completion.

Regulators would also likely facilitate debt restructuring discussion with offshore creditors after business operations start to stabilise, the U.S. investment bank said.

After the flurry of statements, Evergrande’s stock slid as much as 15% on Monday to HK$1.92 – its lowest since May 2010.

Its November 2022 bond – one of two bonds that could go into default on non-payment on Monday – was trading at the distressed price of 20.787 U.S. cents on the dollar, compared with 20.083 cents at the end of Friday.

LIQUIDITY SQUEEZE

Evergrande has been struggling to raise capital by disposing of assets, and the government has asked Chairman Hui Ka Yan to use his wealth to repay company debt. read more

The firm is just one of a number of developers facing an unprecedented liquidity squeeze due to regulatory curbs on borrowing, causing a string of offshore debt defaults, credit-rating downgrades and sell-offs in developers’ shares and bonds.

To prevent further turmoil, regulators since October have urged banks to relax lending for developers’ normal financing needs and allowed more real estate firms to sell domestic bonds. read more

To free up funds at banks, Premier Li Keqiang on Friday said China will cut the bank reserve requirement ratio (RRR) “in a timely way” to increase support for the real economy. read more

Still, the government may have to significantly step up policy-easing measures in the spring to prevent a sharp downturn in the property sector, Japanese investment bank Nomura said in a report published on Sunday.

CONTAGION

Smaller developer Sunshine 100 China Holdings Ltd (2608.HK) on Monday said it had defaulted on a $170 million U.S. dollar bond due Dec. 5 “owing to liquidity issues arising from the adverse impact of a number of factors including the macroeconomic environment and the real estate industry”. read more

The delinquency will trigger cross-default provisions under certain other debt instruments, the developer said.

Its shares fell nearly 3%.

Last week, Kaisa Group Holdings Ltd (1638.HK) – the largest offshore debtor among Chinese developers after Evergrande – said it had failed to secure approval from offshore bondholders to carry out an exchange offer of its 6.5% offshore bonds due Dec. 7 , without which it said it would risk default.

The developer has begun talks with some of the offshore bondholders to extend the deadline for the $400 million debt repayment, sources have told Reuters. read more

Smaller rival China Aoyuan Property Group Ltd (3883.HK) last week also said creditors have demanded repayment of $651.2 million due to a slew of credit-rating downgrades, and that it may be unable to pay due to a lack of liquidity. read more

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Reporting by Clare Jim in Hong Kong; Additional reporting to Shuyan Wang in Beijing; Editing by Anne Marie Roantree and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

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China’s Kaisa fails to get bondholders nod to extend maturity, risks default

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A sign of the Kaisa Plaza, a real estate property developed by Kaisa Group Holdings, is seen near its apartment building in Beijing, China December 1, 2021. REUTERS/Tingshu Wang

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  • Kaisa $400 million 6.5% notes due on Dec. 7
  • Kaisa still looking at asset sales, extending debt
  • Evergrande’s 30-day grace period for missed coupon on Dec. 6

Dec 3 (Reuters) – Chinese property developer Kaisa Group Holdings Ltd (1638.HK) said on Friday it failed to secure the minimum 95% approval it needed from offshore bondholders to extend the maturity of a $400 million note due next week, raising the risk of a default.

With the Chinese property sector gripped by an unprecedented liquidity squeeze, Kaisa now faces the possibility of defaulting on its 6.5% offshore bonds due Dec. 7 and drawing renewed focus on other developers also staring at a wall of offshore debt maturing over the next few months.

Kaisa had hoped to exchange the $400 million 6.5% offshore bonds for new notes due June 6, 2023 at the same interest rate if at least 95% of holders accepted. It did not disclose how many bondholders had consented to the offer.

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Shares of the embattled property firm dropped 9.8% to a record low of HK$0.92, taking the stock’s plunge so far this year to around 75%.

The firm, which became the first Chinese property developer to default on its dollar bonds in 2015, said it had been in talks with representatives of certain bondholders, but no “legally binding agreement” had been entered into yet.

“To ease the current liquidity issue and reach an optimal solution for all stakeholders, the company is assessing and is closely monitoring the financial condition and cash position of the group,” it said on Friday.

It added that it still exploring selling assets and extending or renewing debt obligations, but cautioned there was no guarantee it would be able to meet the Dec. 7 maturity.

A failure to repay or reach an agreement with creditors would have “a material adverse effect” on Kaisa’s financial condition, it said.

Kaisa is the second-largest dollar bond issuer among China’s property developers after China Evergrande Group (3333.HK), which has more than $300 billion in liabilities, and like the others has been scrambling to raise capital to stave off a default.

Reuters reported last month that the firm was looking to sell its Hong Kong-listed property management unit, Kaisa Prosperity Holdings Ltd (2168.HK).

Last week, in its notes exchange offer, Kaisa said it could consider a debt restructuring exercise if bondholders did not approve the extension of maturity.

Kaisa’s failure in getting a much-needed lifeline from its creditors will also weigh on other smaller developers that are looking to avoid long and messy litigation and restructuring processes, analysts have said.

Also on the horizon is the end of a 30-day grace period for Evergrande, which has been narrowly avoiding defaults, after it failed to pay coupons totalling $82.5 million due on Nov. 6.

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Reporting by Sameer Manekar in Bengaluru; Writing by Sumeet Chatterjee and Nikhil Kurian Nainan; Editing by Shri Navaratnam and Christopher Cushing

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U.S. homebuilding drops, construction backlog surges as shortages worsen

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Residential single family homes construction by KB Home are shown under construction in the community of Valley Center, California, U.S. June 3, 2021. REUTERS/Mike Blake

  • Housing starts fall 0.7% in October
  • Single-family starts drop 3.9%; multi-family up 6.8%
  • Building permits rise 4.0%; single-family gain 2.7%

WASHINGTON, Nov 17 (Reuters) – U.S. single-family homebuilding tumbled in October while the number of houses authorized for construction but not yet started jumped to a 15-year high, underscoring the disruption to the housing market from an ongoing shortage of materials and labor.

Though the report from the Commerce Department on Wednesday showed an increase in permits for future homebuilding, the rise was concentrated in the volatile multi-family housing segment. This will do little to alleviate an acute shortage of houses on the market, which has led to record annual gains in home prices.

“Residential housing construction activity continues to flounder,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “There are zoning problems, higher land costs, a lack of labor, and inflation has inflated the cost of raw building materials.”

Single-family housing starts, which account for the largest share of the housing market, dropped 3.9% to a seasonally adjusted annual rate of 1.039 million units last month. The fourth-straight monthly decline pushed starts to the lowest level since August 2020. Homebuilding fell in all four regions, with large decreases in the Northeast, Midwest and West.

The densely populated South, where the bulk of homebuilding occurs, reported a 1.8% drop in single-family starts.

Housing starts and building permits

Homebuilding has essentially been treading water this year as builders battle shortages and higher prices of raw materials. A survey from the National Association of Home Builders on Tuesday showed confidence among single-family homebuilders rose for the third straight month in November, but noted that “supply-side challenges, including building material bottlenecks and lot and labor shortages, remain stubbornly persistent.”

Lumber, which is used for framing, remains expensive and prices for copper, another essential material in homebuilding, are high. In addition, there were about 333,000 job openings in the construction industry as of the end of September. Some household appliances are in short supply.

Reuters Graphics

Construction costs jumped a record 12.3% year-on-year in October, according to producer price data published last week.

The materials squeeze could ease during winter, a typically slow season for homebuilding in the Northeast and Midwest. Slowing demand for houses because of reduced affordability could also help to lessen the pressure on supply.

Residential investment contracted for a second consecutive quarter in the third quarter. It is likely to remain subdued in the final three months of the year.

“Supply-chain bottlenecks will likely limit construction activity in the short term, but the supply picture should look better in 2022,” said Abbey Omodunbi, a senior economist at PNC Financial in Pittsburgh, Pennsylvania. “Declining affordability and rising mortgage rates will soften demand in the next year.”

Stocks on Wall Street were trading lower. The dollar dipped against a basket of currencies. U.S. Treasury prices were higher.

BUILDING PERMITS RISE

Starts for buildings with five units or more increased 6.8% to a rate of 470,000 units last month. Workers returning to offices and schools reopening for in-person learning, thanks to COVID-19 vaccinations, are fueling demand for rental apartments.

With single-family homebuilding declining, overall housing starts slipped 0.7% to a rate of 1.520 million units in October.

Economists polled by Reuters had forecast starts rebounding to a rate of 1.576 million units.

Starts have declined from the 1.725 million unit-pace scaled in March, which was a more than 14-1/2-year high.

Still, homebuilding remains underpinned by a severe shortage of previously owned homes on the market, which has resulted in double-digit house price growth.

The backlog of single-family houses authorized for construction but not yet started jumped 4.8% to a rate of 152,000 last month, the highest since August 2006. Permits for future homebuilding increased 4.0% to a rate of 1.650 million units in October. Single-family permits rose 2.7% to a rate of 1.069 million units, leaving them just above starts.

Reuters Graphics

Permits for buildings with five units or more surged 6.5% to a rate of 528,000 units. Housing completions were unchanged at a rate of 1.242 million units. Single-family home completions dropped 1.7% to rate of 929,000 units.

The stock of single-family housing under construction increased 1.4% to a rate of 726,000 units last month, the highest since May 2007. Multi-family homes under construction rose to the highest level in more than 47 years.

Over time the housing backlogs and more inventory could help to bring more homes on to the market and cool the house price inflation, which has sidelined some first-time buyers. A lot will, however, hinge on the supply of building materials and other inputs as well as labor.

“The recent slowdown in project completions has limited home sales in new communities,” said Mark Vitner, a senior economist at Wells Fargo in Charlotte, North Carolina. “That said, the growing backlog of projects should keep builders busy for the next couple of years.”

Reporting By Lucia Mutikani;
Editing by Chizu Nomiyama and Andrea Ricci

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Investors await Evergrande’s overdue $148 mln payment as debt woes grow

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A man rides an electric bicycle past the construction site of Guangzhou Evergrande Soccer Stadium, a new stadium for Guangzhou FC developed by China Evergrande Group, in Guangzhou, Guangdong province, China September 26, 2021. REUTERS/Aly Song/File Photo

  • Evergrande due to pay $148 mln bond coupon on Wednesday
  • Shares of developer Fantasia plunge 50% after missing payment
  • S&P downgrades Shimao Group to “BB+” from “BBB-“

SHANGHAI/HONG KONG, Nov 10 (Reuters) – Cash-strapped China Evergrande Group (3333.HK) faced a Wednesday deadline for making an offshore bond payment, while a credit rating downgrade on another property firm added to mounting concerns about a liquidity squeeze in the sector.

Evergrande, the world’s most indebted developer, has been stumbling from deadline to deadline in recent weeks as it grapples with more than $300 billion in liabilities, $19 billion of which are international market bonds.

The company has not defaulted on any of its offshore debt obligations, but another overdue $148 million bond payment must be made on Wednesday. There was no word on that payment as of early afternoon Asia time.

The developer, which also has coupon payments totalling more than $255 million on its June 2023 and 2025 bonds on Dec. 28, declined to comment when contacted by Reuters about its Wednesday payment deadline. read more

China’s property woes rattled global markets in September and October. There was a brief lull in mid-October after Beijing tried to reassure markets the crisis would not be allowed to spiral out of control. read more

But concerns have resurfaced, with the U.S. Federal Reserve warning on Tuesday that China’s troubled property sector could pose global risks.

More developers are seeing their credit ratings slashed on their worsening financial profiles.

S&P Global Ratings said on Wednesday it had downgraded property developer Shimao Group Holdings’ (0813.HK) rating to “BB+” from “BBB-” over concerns that tough business conditions would hinder the company’s efforts to reduce debts.

S&P considers a rating under “BBB-” to be speculative grade.

Worries over the potential fallout from Evergrande have also roiled China’s property sector in recent days, slamming the bonds of real estate companies amid worries the crisis could spread to other markets and sectors.

Shares of developer Fantasia Holdings (1777.HK) plunged 50% on Wednesday after it said there is no guarantee it will be able to meet its other financial obligations following a missed payment of $205.7 million that was due Oct. 4.

FINANCING OPTIONS

Underlining the liquidity squeeze, some real estate firms disclosed plans to issue debt in the inter-bank market at a meeting with China’s inter-bank bond market regulator, the Securities Times reported on Wednesday. read more

In the near future, real estate companies will issue bonds in the open market for financing, while banks and other institutional investors will assist via bond investment, said the paper.

Debt-laden developers including Evergrande and peer Kaisa Group (1638.HK) have also been looking to raise cash to repay their many creditors by selling some of their property and other business assets.

Beijing has been prodding government-owned firms and state-backed property developers to purchase some of Evergrande’s assets to try to control the fall. read more

Rising concerns about the developers’ woes spreading to other sectors was visible on Wednesday as the spread, or risk premium, between lower risk, investment grade Chinese firms and U.S. Treasuries widened to a more than five-month high. (.MERACCG)

Despite the debt woes of Evergrande, its electric vehicles (EV) unit is pushing ahead with its business plan. The unit is seeking Chinese regulatory approval to sell its inaugural Hengchi 5 sport-utility vehicles. read more

China Evergrande New Energy Vehicle Group Ltd (0708.HK) plans to sell HK$500 million ($64 million) worth of shares to fund production of new energy cars.

Shares in Evergrande were little changed from previous close on Wednesday afternoon, while the EV unit was up 2.2%.

Founded in Guangzhou in 1996, Evergrande epitomised a freewheeling era of borrowing and building. But that business model has been scuttled by hundreds of new rules designed to curb developers’ debt frenzy and promote affordable housing.

Any prospect of Evergrande’s demise raises questions over more than 1,300 real estate projects it has in some 280 cities.

Reporting by Andrew Galbraith in Shanghai and Clare Jim in Hong Kong; Writing by Sumeet Chatterjee and Ira Iosebashvili; Editing by Stephen Coates and Lincoln Feast.

Our Standards: The Thomson Reuters Trust Principles.

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Some investors have not got Evergrande unit’s bond interest due Nov 6: sources

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The company logo is seen on the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song

HONG KONG/SHANGHAI, Nov 8 (Reuters) – Some holders of offshore bonds issued by a unit of developer China Evergrande Group (3333.HK) had not received interest payments due on Nov. 6 by Monday morning in Asia, two people familiar with the matter said.

Scenery Journey Ltd was due to make semi-annual coupon payments on Saturday worth a combined $82.49 million on its 13% November 2022 and 13.75% November 2023 U.S. dollar bonds. ,

Non-payment of interest by Nov. 6 would have kicked off a 30-day grace period for payment.

Twice in October, Evergrande narrowly averted catastrophic defaults on its $19 billion worth of bonds in international capital markets by paying coupons just before the expiration of their grace periods.

One such period expires on Wednesday, Nov. 10, for more than $148 million in coupon payments that had been due on Oct. 11. Evergrande is also due to make coupon payments totalling more than $255 million on its June 2023 and 2025 bonds on Dec. 28.

A spokesperson for Evergrande did not immediately respond to a request for comment. The sources could not be named as they were not authorised to speak to the media.

Reuters was unable to determine whether Evergrande has told bondholders what it planned to do regarding the coupon payment due on Saturday.

BONDS, SHARES FALL

Evergrande’s shares edged lower on Monday, finishing the morning down 0.9%. They have fallen nearly 85% this year. Duration Finance data showed the company’s dollar bonds continuing to trade at discounts of about 75% from their face value on Monday.

Once China’s top-selling developer, Evergrande has been reeling under more than $300 billion in liabilities, and its liquidity woes have reverberated across the country’s $5 trillion property sector, prompting a string of offshore debt defaults, credit rating downgrades and sell-offs in the developers’ shares and bonds in recent weeks.

Spreads on Chinese corporate high-yield dollar debt (.MERACYC) widened to record highs on Friday, and on Monday Shanghai Stock Exchange data showed developers’ bonds once again dominating the list of the day’s biggest losers. One yuan bond issued by an onshore unit of Shimao Group (0813.HK) was suspended from trade after falling more than 34%.

Falls even extended to investment-grade names. Tradeweb data showed a 4.75% January 2030 bond issued by a unit of Sino-Ocean Group Holding (3377.HK) fell nearly 15% on Monday to just above 75 cents. Sino-Ocean is rated “BBB-” by Fitch Ratings and has a “Baa3” rating from Moody’s Investors Service.

Nomura economists Ting Lu and Jing Wang said in a note that they expected “much higher” repayment pressures on developers in the coming quarters, almost doubling from $10.2 billion in the fourth quarter of 2021 to $19.8 billion and $18.5 billion in the first and second quarters of 2022, respectively.

“With the worsening property sector, we might see a rebound of defaults onshore by developers, and bond prices in onshore and offshore markets may increasingly impact one another as investors are on alert,” they said.

“We believe regulators are likely to step up efforts to avoid rising defaults in China’s (offshore commercial dollar bond) market.”

Regulators in October told developers to proactively prepare for repayment of both principal and interest on their foreign bonds and to “jointly maintain their own reputations and the overall order of the market.” read more

Reporting by Clare Jim and Andrew Galbraith; Editing by Muralikumar Anantharaman

Our Standards: The Thomson Reuters Trust Principles.

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Evergrande makes coupon payment before Friday deadline -sources

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The company logo is seen on the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song

HONG KONG, Oct 29 (Reuters) – Developer China Evergrande Group has made an interest payment for an offshore bond before a grace period expired on Friday, two people with direct knowledge of the matter said, narrowly averting a catastrophic default for the second time in a week.

Evergrande (3333.HK), once China’s top-selling developer, is reeling under more than $300 billion in liabilities, fuelling worries about the impact of its fate on the world’s second-largest economy as well as on global markets. read more

The property developer, which staved off a default last week by securing $83.5 million for the last-minute payment of interest on a bond, needed to make $47.5 million in coupon payments to bondholders by Friday.

A failure to pay by the Friday deadline would have triggered cross-defaults on all of the company’s $19 billion worth of bonds in international capital markets, in what would have been the world’s second-largest emerging market corporate debt default.

Evergrande did not respond to Reuters’ request for comment. The people declined to be identified due to the sensitivity of the matter.

Reuters was not able to determine the source of the funds used to make the interest payments. Bloomberg News reported earlier this week that Chinese authorities had urged Evergrande’s founder, Hui Ka Yan, to pay the developer’s debts out of his personal wealth.

Shares of Evergrande gave up early gains to fall about 0.8% by late morning on Friday, versus a 0.3% decline in the Hang Seng Index (.HSI). The Hang Seng Mainland Properties Index (.HSMPI) fell about 0.9%, while an index of developers’ mainland A-shares (.CSI000952) dropped 3.6%.

Prices of the developer’s bonds jumped higher on Friday, with its 11.5% January 2023 bond surging more than 9%, and its 12% January 2024 bond up nearly 8% on the day, data from Duration Finance showed.

That still left them trading at discounts of more than 75% from their face value, with the 2023 bond yielding nearly 190%.

One bondholder said he maintained a negative outlook for the developer despite it making the coupon payment.

“I only think they are buying time at this point,” the bondholder said.

Evergrande missed coupon payments totalling nearly $280 million on its dollar bonds on Sept. 23, Sept. 29 and Oct. 11, beginning 30-day grace periods for each.

It still has nearly $338 million in other offshore coupon payments coming due in November and December.

The New York Times earlier reported that the developer made an interest payment, citing a person speaking on condition of anonymity.

“Evergrande has tried its best to solve liquidity problems, but it’s a little bit difficult to gather enough capital to pay all the debt,” said Cliff Zhao, chief strategist at China Construction Bank International in Hong Kong.

“I think there (will) be some negotiations between Evergrande and its lenders, so some sort of haircut is still possible. The market still needs some time to digest and to price this in.”

DEBT CRISIS

Evergrande’s woes have snowballed for months and its dwindling resources set against its vast liabilities have wiped out 80% of its value, leading some analysts to consider default at some point inevitable. read more

Even as Evergrande secures funds to make payments, other Chinese developers whose fortunes have been hit by market concerns over Evergrande’s debt crisis have slid into formal default.

Fantasia Holdings Group Co Ltd (1777.HK), Sinic Holdings (Group) Co Ltd (2103.HK), China Properties Group Ltd (1838.HK) and Modern Land (China) Co Ltd (1107.HK) have all defaulted on dollar debt obligations this month.

Other developers with significant dollar debt have proposed extending offshore bond maturities or undertaking debt restructuring in a meeting with regulators, sources have said. read more

In a meeting with developers this week, China’s National Development and Reform Commission (NDRC) and the State Administration for Foreign Exchange told developers facing large offshore debt maturities to evaluate repayment risk and report difficulties.

The NDRC also implored developers to meet offshore debt obligations, and maintain their reputations and market order. read more

“Selective defaults in the offshore market are emphatically not acceptable for the authorities, and the NDRC clarification this week should reassure offshore investors that they will be treated fairly alongside onshore investors,” DBS strategist Wei Liang Chang said in a client note.

Even developers who have not defaulted have seen their share and bond prices walloped. On Friday, Chinese Estates Holdings Ltd (0127.HK) said it would book an aggregate loss of HK$1.36 billion in the current fiscal year from the sale of all of its bonds issued by peer Kaisa Group Holdings Ltd (1638.HK).

Concerns over the systemic impact of a default by Evergrande have widened spreads on Chinese high-yield dollar debt (.MERACYC) to record levels as investors demand higher risk premiums.

Investor worries have also kept the cost of insuring against default on China’s sovereign debt elevated. That cost earlier this month touched its highest level since the height of the pandemic in 2020.

BANK EXPOSURE

Founded in Guangzhou in 1996, Evergrande epitomised a freewheeling era of borrowing and building. But that business model has been scuttled by hundreds of new rules designed to curb developers’ debt frenzy and promote affordable housing.

Any prospect of Evergrande’s demise raises questions over the fate of more than 1,300 real estate projects it has ongoing in some 280 cities.

Bank exposure to developers is also extensive.

A leaked 2020 document, branded fake by Evergrande but taken seriously by analysts, showed the developer’s liabilities extended to more than 128 banks and over 121 non-banking institutions.

Reporting by Svea Herbst-Bayliss, Clare Jim and Andrew Galbraith; Additional reporting by Tom Westbrook; Writing by Megan Davies and Sumeet Chatterjee; Editing by Stephen Coates and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

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