China Evergrande in an exchange filing mentioned “there is no guarantee that the Group will have sufficient funds to continue to perform on its financial obligations” given its liquidity status. Evergrande noted that it plans to actively engage with offshore creditors to formulate a viable restructuring plan. This comes after Evergrande received a demand to perform its obligations under a guarantee for ~$260mn. Immediately after the announcement, Bloomberg says that Chinese regulators suggested that authorities were ‘striving to contain the fallout on homeowners, the financial system and the broader economy rather than orchestrate a bailout’. The government of Guangdong summoned Evergrande founder Hui Ka Yan saying that it would send a working group to the developer to oversee risk management, strengthen internal controls and maintain normal operations. Bloomberg adds that the major focus is on whether Beijing can coordinate a restructuring without upending the broader real estate sector. Restructuring talks have been awaited since September when its dollar bonds plunged to below 30 cents on the dollar,
Today, December 6, Evergrande’s 30-day grace period for two coupon payments on its dollar bonds issued by Scenery Journey come due. The bonds in question are its 13% 2022s and 13.75% 2023s with coupon payments of $41.9mn and $40.6mn respectively. Evergrande’s dollar bonds are trading at distressed levels of 20-22 cents on the dollar.
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