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Evergrande building in Hong Kong:
interest due on bond
Photo: Bobby Yip / REUTERS
The heavily indebted Chinese real estate company Evergrande is rapidly approaching the end of the next payment period, which if exceeded can lead to bankruptcy. On September 29, the company failed to remit bond interest due of $ 45.2 million to investors in the papers. This set in motion a grace period of 30 days, which ends tomorrow, Friday. If Evergrande owes the money, there is an imminent bankruptcy.
A similar situation already existed a few days ago.
At the time, however, Evergrande transferred the due interest of 83.5 million dollars at the last moment.
The money was actually due on September 23, but a grace period of 30 days also applied in that case.
Had Evergrande not been able to raise the money on time, a formal default on payment would have been the result.
Overall, the group is about to make payments on several current bonds, as reported by the Bloomberg news agency.
Evergrande is therefore behind schedule with at least two other dollar bills.
By the end of the year, Evergrande will still have interest payments on dollar bonds of around $ 530 million in the house.
Concerns about the company, which sits on a mountain of debt totaling more than 300 billion dollars, have repeatedly led to turbulence on the world's stock exchanges in recent weeks.
Countless Chinese also have to fear for their money in the event of a possible failure of Evergrande, with which, for example, they have already paid down for unfinished real estate projects for the company.
Evergrande shares have been suspended from trading since early October.
Fears that a failure of Evergrande could - similar to the bankruptcy of the US bank Lehman Brothers - plunge the financial markets beyond the borders of China into a crisis were already making the rounds.
In the meantime, however, there are various voices that present the risks of such a payment default as being more manageable.
Not a second Lehman moment
For example, the Chinese central bank recently spoke out for the first time on the Evergrande case. The institute tried to refute concerns that the Evergrande crisis could affect the entire banking industry. Individual financial institutions are not exposed to great risk, said the head of the financial markets department of the People's Bank of China. "All in all, the risk of spilling over into the financial sector is manageable." Evergrande is said to expedite asset sales and resumption of construction projects. Authorities would intervene to provide financial support for projects.
France's central bank chief
Francois Villeroy de Galhau
(62) has also tried to counter such worries.
History is not about to repeat itself, said Villeroy de Galhau.
"I think Evergrande is primarily a Chinese problem," said the councilor of the European Central Bank (ECB).
"There will be no contagion outside of China."
Evergrande is a serious problem for Chinese authorities.
Noteworthy: Evidently Evergrande has so far only been holding out its international bond investors who have invested in dollar-listed paper.
On the other hand, according to insiders, the company recently paid interest payments due on yuan bonds.
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