The heavily indebted group operates and develops 1,300 real estate projects all over the country.
(Photo: Bloomberg)
Zurich, Frankfurt The heavily indebted Chinese real estate developer Evergrande has resumed work on more than ten construction projects. All projects in Shenzhen, Dongguan and other cities are being carried out according to plan, the company said on Sunday on the social network Wechat.
It is unclear, however, at how many construction sites the $ 300 billion indebted company had previously had to stop work. Spread across the country, Evergrande operates and develops 1,300 real estate projects.
The announcement of the resumption of work came after Evergrande averted an impending insolvency on Friday for the time being. Shortly before the grace period expired, the company paid $ 83.5 million in interest on a US dollar bond to an escrow account at Citibank, as the Reuters news agency reported with reference to Insider. The insider confirms a report by the state financial newspaper “The Securities Times”.
The news brought some relief to investors and regulators. The real estate company’s dollar bonds skyrocketed on Friday. Evergrande’s shares also rose by a good four percent on the Hong Kong stock exchange. However, since February 2021, the papers have lost around 95 percent of their value.
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“This is a positive surprise,” said James Wong, fund manager at Gaoteng Global Asset Management. The news will strengthen bondholders’ confidence, he says. Evergrande has missed coupon payments on its dollar bonds totaling approximately $ 280 million due on October 23rd, 29th and October 11th.
LGIM expert expects Evergrande to be restructured
According to figures from the financial information service Bloomberg, the big creditors include well-known investors: the British asset manager Ashmore Group, which specializes in emerging markets, large fund providers such as Blackrock, Fidelity, Invesco, the banks Pictet and UBS from Switzerland, BNP Paribas from France and the Singapore sovereign wealth fund Temasek.
Other large fund investors such as the cooperative Union Investment and the British Legal & General Investment Management (LGIM) say they have sold their bonds. Uday Patnaik, Head of Emerging Markets Bonds at LGIM, says: He expects the coupon payment for the 8.25 percent bond to mature in 2022.
Nevertheless, LGIM sold the paper on Friday when the bonds jumped in price. “It was a tactical sale, we bought around 24 percent of the nominal value and now sold 27 percent of the nominal value,” explains Patnaik – thus making a profit.
The emerging market expert expects Evergrande to be restructured. The company is only buying time to undertake a comprehensive rescheduling. A coupon payment is a small price to pay for an orderly restructuring as ordered by Beijing.
More: At Evergrande, the danger is by no means averted – on the contrary.