SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

China Evergrande’s electric vehicle ambitions seem to have hit a roadblock with government scrutiny into its investments. Evergrande New Energy Vehicle Group, the EV unit of the indebted property developer was named in a directive in November from the National Development and Reform Commission (NDRC) where local governments were asked to investigate land use, investment and progress of EV projects since 2015. The factory, located in Lu’an is still unfinished with no vehicle released commercially till date, as per the FT. Evergrande had initially looked to spend CNY30bn ($4.6bn) on production capabilities between 2019 and 2021 until the pandemic hit. The EV plans were considered to be somewhat of a ‘land grab’ according to Deng Haozhi, an independent economist – Evergrande’s designation of land for EV production can help it acquire land cheaply and help them negotiate separate deals for other land nearby at a time when authorities have made policies to restrict land sales. Besides, Evergrande’s EV venture competes in a crowded market that is flooded with players but only comprise ~5% of car sales.

For the full story, click here

In other news, Evergrande redeemed a HKD 16.1bn ($2.1bn) convertible bond with internal funds. Evergrande, which has debt of over $120bn, issued the 5Y convertible bond in early 2018, allowing holders to convert their notes to equity by February 14 at HKD 33.24/share. The share price has been much lower at HKD 15. The redemption is considered to be a sign of passing a test of liquidity and avoiding a premium pay out, as per Bloomberg.

Evergrande’s bonds were flat with their 8.75% 2025s at 82.67 and their 8.25% 2022s at 93.42.

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