China Evergrande to avoid default after supplying funds for interest payment: reports
|globalnews.ca 22 Oct 2021 at 02:55|
China Evergrande Group has supplied funds to pay interest on a U.S. dollar bond, a person with direct knowledge of the matter told Reuters on Friday, days before a deadline that would have seen the developer plunge into formal default.
The person said Evergrande remitted $83.5 million to a trustee account at Citibank on Thursday – as earlier reported on Friday by state-backed Securities Times – allowing it to pay all bondholders before the payment grace period ends on Oct. 23.
News of the remittance will likely bring relief to investors and regulators worried about a default’s wider fallout in global financial markets, adding to reassurance from Chinese officials who have said creditors’ interests would be protected.
Still, the developer will need to make payments on a string of other bonds.
“They seem to be avoiding short-term default and it’s a bit of a relief that they have managed to find liquidity,” said a Hong Kong-based debt restructuring lawyer representing some bondholders.
“But still, Evergrande does need to restructure its debt. This payment might be a way for them to get some sort of buy-in with stakeholders before the heavy work needed on the restructuring.”
Evergrande did not respond to Reuters’ request for comment. Citibank declined to comment. The person with knowledge of the matter was not authorised to speak with media and so declined to be identified.
The remittance comes a day after financial information provider REDD on Thursday said Evergrande had secured more time to pay a defaulted bond it guaranteed, issued by Jumbo Fortune Enterprises. “This is a positive surprise,” said James Wong, portfolio manager at GaoTeng Global Asset Management, who had expected a default.