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China Evergrande repays missed bond coupon - reports

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The struggling Chinese property developer China Evergrande Group has repaid a missed coupon on a dollar bond, just days before the default deadline.

The company, which has debts of around US$305bn, missed an interest payment of US$83.5m on 23 September, which triggered a 30-day grace period.

Evergrande has now transferred the US$83.5mln payment to a trustee and the funds will be paid to investors before this weekend’s deadline, according to a report by the Chinese newspaper Securities Times.

The group missed further payments totalling around US$193mln on 29 September and 11 October. They also have a 30-day grace period.

Evergrande said on Wednesday that it had abandoned plans to sell a majority stake in its property services arm to Hopson Development Holdings for US$2.6bn, while last week Chinese state-owned Yuexiu Property pulled out of a proposed US$1.7bn deal to buy Evergrande’s Hong Kong headquarters.

READ: China Evergrande shares plummet as property services sale fails

James Wong, portfolio manager at GaoTeng Global Asset Management told the Guardian that the interest repayment would boost bondholders’ confidence, adding “there are many coupon payments due ahead. If Evergrande pays this time, I don’t see why it won’t pay the next time”.

But Jeffrey Halley, senior market analyst at Oanda in Siungapore, said it was hard to predict what would happen with Evergrande given its enormous debts.

“It will still be a headwind for China markets because there are just so many variables, so many ways this story could wash out,” he said. “I think this will be a short-term positive but I don’t think this will change the overarching fears about what the true state of the sector or the China economy is at the moment.”

Bondholders are likely to remain in “wait and see” mode, the Financial Times reported, citing a person advising investors. “I don’t think this materially changes the likelihood of a restructuring taking place, though it will probably delay the immediate need for the company to engage with creditors,” the person told the FT.

Evergrande’s dollar bonds rose sharply on the news, with its April 2022 and 2023 notes jumping more than 10%, the Guardian reported, citing data provider Duration Finance.

Evergrande shares jumped nearly 4% in Hong Kong.

Story by ProactiveInvestors


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