Beijing regulators have issued instructions to Evergrande telling the developer to focus on completing unfinished properties, repaying individual investors and avoiding a near-term default on dollar bonds as per Bloomberg sources. They are said to have told Evergrande to proactively communicate with bondholders to avoid a default but did not give specific guidance. Bloomberg adds that there was no indication of the regulators offering financial support for the bond payment, and that it was unclear whether officials believed Evergrande should eventually impose losses on offshore creditors. The source said that the regulators were trying to know more on the holders of Evergrande’s bonds.

Evergrande did not provide any update on its coupon payment of $83.5mn due on its dollar 8.25% 2022s yesterday. The notes have a 30-day grace period for the payment to be made before being considered a default. The next offshore bond payment for the developer is $47.5mn in coupons due on September 29.

Separately, WSJ noted sources reporting that China had asked local governments to get “ready for a possible storm” and prepare for a downfall of the property developer. The sources said that local government agencies and SOEs were asked to step-in only at the last minute if Evergrande fails to manage its issues in an orderly manner.

Evergrande’s dollar bonds rallied on Thursday by 6-8 cents. Its USD 8.25% 2022s jumped 8 cents to 33.75, its 10.5% 2024s jumped 6.3 to 30.8 and its 8.75% 2025s jumped 6.1 to 30.6 cents on the dollar.

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