The Chinese real estate developer does not meet its payment obligations again until the end of a 30-day grace period.
(Photo: Reuters)
Beijing The heavily indebted Chinese real estate developer Evergrande has apparently again prevented a default. As Chinese and international media unanimously report with reference to several creditors of coupon payments due on Wednesday with a total value of around 148 million US dollars, they have received the overdue interest payments.
Evergrande initially failed to make the payments due in October; a 30-day grace period ended on Wednesday.
A spokesman for international clearing company Clearstream told Bloomberg news agency that its customers had received overdue interest payments on three dollar bonds issued by Evergrande.
It is not the first time that Evergrande has only just met its payment obligations within the 30-day grace period. The situation at the real estate company remains tense. According to official figures, the company has a total debt of more than $ 300 billion.
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Most recently, Evergrande had successfully sold assets. The real estate company sold around 5.7 percent of the Hong Kong-listed Hengten Networks Group for $ 145 million.
Other Chinese real estate developers are also in trouble. After Evergrande and a number of other real estate groups, the Kaisa Group, number 25 on the Chinese market, recently asked its creditors to defer payments.
Funding rules could be relaxed
Hope this week was fueled by reports from the Chinese media that the country’s authorities are likely to make it easier for Chinese real estate companies to issue local currency bonds in order to prevent their funding from deteriorating further.
As the “Securities Times” reported on Wednesday, the Interbank Market Dealers Association held a symposium on November 9th, attended by delegates from real estate companies. China Merchants Shekou, Poly Development, Country Garden and other companies planned to register on the interbank market in order to be able to issue debt financing instruments in the near future.
According to another report picked up by financial news agency Bloomberg, state-owned companies are pushing for the right to increase borrowing for mergers. That could make it easier for them to take over ailing property developers.
The Chinese state has not yet appeared publicly as a supporter of the tumbling market. A Chinese State Council think tank, a kind of cabinet of sorts, met with real estate developers and banks in Shenzhen on Monday to find a solution for the real estate sector, a person familiar with the matter told Reuters. In addition to Kaisa, representatives from China Vanke, Ping An Bank, China Citic Bank, China Construction Bank and CR Trust also took part in the talks.
Experts anticipate that there will be further defaults on Chinese property developers. The reason for the adjustment in China’s real estate market is the stricter regulation of the industry by the Chinese government. In the past few months, it had taken measures to cool the country’s hot real estate market. Home loans have been made more restrictive and, in particular at the local level, more restrictions have been imposed on private individuals to buy property.
However, a measure at the end of 2020 is seen as the key moment in which the entire sector began to falter. At that time, the government imposed new credit restrictions on property developers, the so-called “three red lines”. As a result, the entire industry had to reorganize its financing.
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