Evergrande to make domestic bond coupon payment, soothing fears
China Evergrande Group's main unit said on Wednesday it would make a coupon payment on its domestic bonds on Sept. 23, offering some relief to jittery markets that had been on edge over fears that a default of China's No. 2 developer could ripple through the global financial system.
1/3Vehicles drive by unfinished residential buildings from the Evergrande Oasis, a housing complex developed by Evergrande Group, in Luoyang, China September 16, 2021. Picture taken September 16, 2021. REUTERS/Carlos Garcia RawlinsRead MoreEvergrande says to make bond coupon payment Sept. 23
Investors, analysts play down threat of "Lehman moment"Fed's Powell expected to be asked about Evergrande at meetingNEW YORK/HONG KONG, Sept 22 (Reuters) - China Evergrande Group's(3333.HK)main unit said on Wednesday it would make a coupon payment on its domestic bonds on Sept. 23, offering some relief to jittery markets that had been on edge over fears that a default of China's No. 2 developer could ripple through
the global financial system.Hengda Real Estate Group said in a statement it would make the coupon payment on its Shenzhen-traded 5.8% September 2025 bond on time on Sept. 23.The announcement comes as Evergrande, once the, inches closer to a key deadline for an interest payment on a dollar bond, with financial markets tense even as investors and analysts played down the threat of its troubles becoming the country's "Lehman moment." headtopics.com
Hengda Real Estate's coupon payment totals 232 million yuan ($35.88 million), according to Refinitiv data."We are still trying to understand what this payment means for the other bonds but I imagine they would want to stabilise the market and make other coupon payments, given the close scrutiny," said a source familiar with the situation who declined to be identified as they are not authorised to speak to the media.
U.S. stock futures , the yuan and the risk-sensitive Australian dollar rose, while safe-haven assets such as the yen and U.S. Treasuries slipped.Evergrande is set to make its onshore bond payment on time, but the developer has not indicated whether it will be able to pay $83.5 million in interest due on its March 2022 bond on Thursday. It has another $47.5 million payment due on Sept. 29 for March 2024 notes .
Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.Trade in Evergrande's onshore exchange-traded bonds has been halted since Sept. 16, when Hengda Real Estate applied to suspend trading for a day. While trading technically resumed on Sept. 17, it now only takes place through negotiated transactions in what traders said was an attempt to curb volatility.
read moreWhile concerns about the spillover from a messy collapse roiled markets on Monday, U.S. stocks were flat on Tuesday and Chinese shares fell in early trade after a two-day public holiday. But China's property index recovered losses and was up more than 3%, while banking stocks were down around 3%. headtopics.com
Evergrande is so deeply intertwined with China's broader economy - from retail investors to infrastructure-related firms that are a gauge for global commodities demand - that fears over contagion have kept financial markets on tenterhooks."There's been a fair bit of concern about the possibility of contagion," analysts at New York-based Bespoke wrote in a research note on Tuesday. "But so far that concern isn't showing up in parts of the credit markets that have served well as red flags for broader credit crunches in the past."
Evergrande missed interest payments due Monday to at least two of its largest bank creditors, Bloombergreportedon Tuesday, citing people familiar with the matter. The missed payments had been expected as China's housing ministry had said that the company would be unable to pay on time, Bloomberg said.
As investors and policymakers around the world tried to assess the potential fallout, Securities and Exchange Commission (SEC) Chair Gary Gensler said the U.S. market is in a better position to absorb a potential global shock from a major company default than it was before the 2007-2009 financial crisis.
loadingFED MEETINGFed Chair Jerome Powell will likely be asked about the fallout from Evergrande when he speaks after the Fed's two-day meeting that wraps up on Wednesday at 2 p.m. ET. (1800 GMT). Read more: Reuters Top News »
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They know there’s another payment after this one right? And another one after that payment? Welcome to the Hand to Mouth club Evergrande ! Or is it Everstrapped? Still gonna default on the international debt payments though
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