The company, reeling under a debt pile of US$305 billion, was due on Wednesday to make a US$47.5 million bond interest payment on its 9.5 percent March 2024 dollar bond, after having missed US$83.5 million in coupon payments last Thursday.
With liabilities equal to 2 percent of China’s GDP, Evergrande has sparked concerns its woes could spread through the financial system and reverberate around the world, though worries have eased somewhat after the central bank vowed to protect homebuyers’ interests.
The developer’s silence on its offshore payment obligations has, however, left global investors wondering if they will have to swallow large losses when 30-day grace periods end for coupons that were due on September 23 and September 29.
Some offshore Evergrande bondholders had neither received interest payments nor any communication by the end of Wednesday New York time, said the people familiar with the matter, who declined to be identified due to sensitivity of the issue.
A spokesperson for Evergrande did not have any immediate comment.
Reuters was unable to determine whether Evergrande has told bondholders what it plans to do regarding the coupon payment due on Wednesday.
The two missed offshore payments come as the company, which has nearly US$20 billion in offshore debt, faces deadlines on dollar bond coupon payments totalling US$162.38 million in the next month.
Once China’s top-selling developer, Evergrande is now expected to be one of the largest-ever restructurings in the country.
It has been prioritising its onshore liabilities amid concerns about its troubles triggering social unrest.
“I can’t see there being much willingness to give a fairer outcome to offshore bondholders rather than onshore banks, let alone house buyers and people who have lent onshore through the personal loan structures,” said Alexander Aitken, a partner at Herbert Smith Freehills in Hong Kong.
“Of course legally there is also structural subordination from being offshore, which means lenders to Evergrande’s onshore subsidiaries get paid before lenders to the parent company or any offshore debt issuer.” (Reuters)