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

The logo of China’s Evergrande Group appears at the real estate developer’s headquarters in Shenzhen, Guangdong Province, China, September 26, 2021. REUTERS/Ali Song/FILE PHOTO

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  • Debt restructuring hopes keep floor under Evergrande shares
  • Evergrande has not confirmed the default yet
  • “The market will want to wait and see and not give up yet” – Analyst
  • Suspension of trading in Kaisa’s shares

HONG KONG (Reuters) – Shares of China’s Evergrande Group hit a record low on Wednesday after a missed debt deadline put the developer at risk of becoming the country’s biggest defaulter, even as hopes of a managed debt restructuring cooled fears of chaos. Collapse.

So far, any fallout from Evergrande (3333.HK) has been broadly contained, and as policymakers become more vocal and markets become more aware of the issue, the consequences of its problems are unlikely to become widespread, market watchers said.

Evergrande’s failure to make $82.5 million in interest payments due on November 6 on some US dollar bonds will result in a crossover delay on its roughly $19 billion international bonds, with potential ramifications for the Chinese economy and beyond.

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While the 30-day grace period has expired, Evergrande has not announced whether 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 just yet; otherwise Evergrande stock and bond prices would have plummeted,” said Stephen Leung, director of UOB Kay Hian in Hong Kong.

“The market also wants to wait and see what can be done with the local government stepping in now,” Leung added, referring to the move the indigenous county of Evergrande has taken to help contain risks.

Evergrande was once the largest real estate developer in China, with over 1,300 real estate projects. With $300 billion in commitments, it is now at the center of this year’s real estate crisis in China that crushed nearly a dozen smaller companies.

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

Kaisa, China’s largest offshore debt holder among developers after Evergrande, has not paid its 6.5% bond by the end of business hours in Asia, the person said, potentially pushing papers into technical default, leading to defaults across its offshore bonds that They total approximately $12 billion.

Kaisa declined to comment.

A source told Reuters earlier that bondholders who own more than 50 percent of the bonds in question sent the draft deductible terms to the company late on Monday.

Two sources familiar with the matter said that even in the event of a technical default, Kaisa and overseas bondholders would continue discussions.

Stock Record Low

Shares of Evergrande, which have shed more than 20% this month, tumbled 6% in the afternoon at HK$1.72 – the lowest level since its debut in November 2009. The broader market (.HSI) was flat.

Duration Finance data showed that its bonds maturing last month, one of two tranches with a coupon payment expiring Monday, traded at 18.613 cents on the dollar, versus 18.875 from Tuesday’s close in Asia.

Kaisa bonds due in April 2022 were trading at 36,397, little changed from the previous day 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 company’s plans to move forward with restructuring its foreign debt have helped reassure global investors.

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

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(Reporting by Annemarie Rowntree and Donnie Cook) Editing by Himani Sirker

Our Standards: Thomson Reuters Trust Principles.


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