Evergrande fails to pay interest on debt securities again

Evergrande fails to pay interest on debt securities again

Debt holders of Chinese construction company Evergrande said today they had not received interest payments on three bonds issued in dollars, as Chinese corporate debt trades at the highest prices in a decade.

The most indebted construction company in the world should have paid interest, totaling 148 million dollars (128 million euros), by noon on Tuesday in Hong Kong.

Investors said they had not received the money, according to two people familiar with the matter, quoted by the Financial Times newspaper. The bonds were last traded between 21 and 22 cents to the dollar.

Last month, Evergrande missed a crucial $83.5 million (€72.2 million) interest payment on a bond that matures next year. The failure triggered a 30-day grace period before the company formally defaulted. The company has already missed at least five bond interest payments.

Evergrande’s liquidity crisis has raised doubts about the financial health of China’s real estate sector as sales decline and Beijing pressures homebuilders to reduce debt levels. Asia’s high-interest bond market, in which Chinese homebuilders are among the largest issuers after decades of rapid urbanization in the country, has been shaken by panicked sales in recent days that have pushed rates into the market higher values ​​in a decade.

Sinic Holdings, another Chinese homebuilder, said late on Monday that it “probably” will default because it “doesn’t have enough financial resources”. Bonds are trading at around 25 cents for every dollar.

Construction company Fantasia, which was founded by a niece of former Chinese vice president Zeng Qinghong, also failed to pay interest on a $206 million bond.

Sentiment towards Evergrande’s bonds worsened considerably in July after a series of incidents that included freezing its deposits at a Chinese bank and suspending the sale of some projects. The sale of new homes and land in China’s real estate sector represents about a quarter of the country’s economy.