Evergrande faces US$366 million of interest payments before year-end even after narrowly averting default on overdue coupons
- World’s most indebted developer has avoided default with last-minute payments on overdue coupons, according to people familiar with the matter
- Evergrande has eye-popping US$308 billion in total liabilities
It is just a small portion of the cascading amount of debt payments set to come due in the coming months for the world’s most indebted property developer.
On Wednesday, Evergrande made overdue interest payments on three of its US-dollar-denominated bonds ahead of the end of a 30-day grace period after missing coupon payments of US$148 million due last month, according to people familiar with the matter.
01:46
World’s most indebted developer, China Evergrande Group, buys time to repay more creditors
Customers of Clearstream, an international central securities depository based in Luxembourg, also received payments on the dollar-denominated Evergrande bonds on Wednesday, according to a Clearstream spokesperson.
Evergrande declined to comment on Thursday.
The company has missed several interest payments on its offshore debt since late September, but managed to avoid a default so far by making interest payments just ahead of the end of grace periods on those bonds.
However, Evergrande is far from out of the woods as its seeks to sell assets and offload properties to try to keep ahead of its repayment schedule.
Bond coupon payment deadlines for China Evergrande
| Date | Amount (US$m) | Type | Maturity date |
|---|---|---|---|
| Sep 23, 2021 | 17.9 | Onshore |
September 2025 |
| Sep 23, 2021 | 83.5 | Offshore | March 2022 |
| Sep 29, 2021 | 45.2 | Offshore | March 2024 |
| Oct 11, 2021 | 68.9 | Offshore | April 2022 |
| Oct 11, 2021 | 42.5 | Offshore | April 2023 |
| Oct 11, 2021 | 36.8 | Offshore | April 2024 |
| Oct 19, 2021 | 9.4 | Onshore | October 2025 |
| Oct 24, 2021 | 115 | Offshore | October 2022 |
| Oct 24, 2021 | 120 | Offshore | October 2023 |
| Oct 27, 2021 | 44.4 | Onshore | April 2026 |
| Nov 6, 2021 | 41.9 | Offshore | November 2022 |
| Nov 6, 2021 | 40.6 | Offshore | November 2023 |
| Nov 6, 2021 | 72.7 | Onshore | May 2023 |
| Nov 6, 2021 | 26.3 | Onshore | May 2024 |
| Nov 26, 2021 | 18.3 | Onshore | May 2023 |
| Dec 5, 2021 | 10.8 | Onshore | June 2023 |
| Dec 28, 2021 | 50.4 | Offshore | June 2023 |
| Dec 28, 2021 | 204.8 | Offshore | June 2025 |
| Jan 22, 2022 | 57.5 | Offshore | January 2023 |
| Jan 22, 2022 | 60 | Offshore | January 2024 |
| Jan 7, 2022 | 44.3 | Onshore | July 2022 |
| Jan 8, 2022 | 24.3 | Onshore | January 2023 |
Sources: Evergrande, SCMP Research
Evergrande held a majority stake in HengTen as recently as January, but has reduced its stake to 20.82 per cent through a series of sales this year, according to regulatory filings with the Hong Kong stock exchange.
This week, Hui Ka-yan, Evergrande’s chairman, also mortgaged his own luxury house on The Peak in Hong Kong, the city’s most expensive address, according to reports in the Chinese media. It is unclear how much Hui received, but the market value of the 5,433 sq ft home is HK$800 million (US$102.7 million).
The fundraising comes as Evergrande faces another deadline in early December to make US$82.5 million in overdue interest payments on offshore debt it missed last week, as well as another US$29 million in coupon payments on its onshore debt between now and December 5.
The latest payments by Evergrande came as property-related loans in the mainland rose last month, signalling a possible step back by the central government on its tightening stance.
As part of its efforts to stem speculative property bubbles, Beijing implemented “three red lines” measures last year that made it more difficult for overleveraged developers to take out bank loans, cutting off an important source of liquidity for the property sector.
Personal home loans in China rose by about 1 per cent to 37.7 trillion yuan in October from the prior-year period, according to the People’s Bank of China.
That also represented a 101.3 billion yuan increase over September, when home sales fell sharply as buyers were spooked by distress among mainland property developers.
Meanwhile, the Securities Journal, published by China’s state media Xinhua, said on Wednesday that banks’ loans to developers rose sharply in October.
02:25
Unpaid by Evergrande, supplier sells car and home to rescue his business
On Thursday, S&P Global Ratings downgraded Kaisa Group Holdings and Agile Group over concerns about their access to liquidity and weakening sales.
“We downgraded Kaisa because the company’s liquidity appears to be depleted,” S&P said as it cut Kaisa’s rating to CCC- from CCC+. “Therefore, we believe non-payment risk is high and could ultimately lead to debt restructuring. A default scenario is inevitable within the next six months.”
S&P forecast this week that home sales in China are likely to fall by 10 per cent in 2022 and another 5 per cent to 10 per cent in 2023, marking the first multi-year sales decline in the private home market’s history in the mainland.
