SHANGHAI, Nov 10 — Some bondholders of cash-strapped China Evergrande Group have not received coupon payments by the end of 30-day grace periods at close of Asia business today, sources said, pushing the developer again to the edge of default.
A failure to pay would result in a formal default by the company and trigger cross-default provisions for other Evergrande dollar bonds, exacerbating a debt crisis looming over the world’s second-largest economy. “It would be quite a surprise if the funds do not flow to the trustee in the requisite timeframe given the immediate cross-default and ripple effect on suppliers and the wider People’s Republic of China real estate market.”
But concerns have resurfaced, with the US Federal Reserve warning yesterday that China’s property sector could pose global risks.Moody’s Investors Service today downgraded Kaisa Group, which yesterday, citing liquidity risks, limited financial flexibility and weak recovery prospects for its creditors.
In the near future, real estate companies will issue bonds in the open market for financing, while banks and other institutional investors will assist via bond investment, the paper said. Rising concerns about the developers’ woes spreading to other sectors was visible on Wednesday as the spread, or risk premium, between lower risk, investment grade Chinese firms and US Treasuries widened to a more than five-month high.
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