New York/Hong Kong: China Evergrande GroupThe U.S. chief unit said on Wednesday it would make a bond coupon payment on September 23, offering some relief to panicked markets, which were grappling with fears that the default of China’s No. 2 developer could ripple through the global financial system. Is.
US stock futures, the yuan and the risk-sensitive Australian dollar rose, while safe-haven assets such as the yen and US Treasury slipped.
Hengda Real Estate Group It will make coupon payments on its Shenzhen-traded 5.8% September 2025 bond on time on September 23, it said in a statement.
The announcement comes as Evergrande, once the country’s best-selling developer, is nearing a crucial deadline for interest payments on dollar bonds, with tensions in financial markets as well as investors and analysts in the country. He minimized the risk of his troubles becoming a “Lehman”. Moment.”
According to Refinitiv data, Hengda Real Estate’s coupon payments totaled 232 million yuan ($35.88 million).
Trading in Evergrande’s onshore exchange-traded bonds has been halted since September 16, when Hengda Real Estate applied to suspend trading for a day. While trading technically resumed on September 17th, it is now only through negotiations which traders said were an attempt to contain volatility.
While markets were volatile on Monday, US stocks were flat on Tuesday and Chinese stocks opened sharply lower after a two-day public holiday. But China’s wealth index later posted losses and gained more than 3%, while banking stocks fell nearly 3%.
Evergrande is so closely tied to China’s broader economy – from retail investors to infrastructure firms that are a gauge for demand for global goods – that fears of contagion have put financial markets on tenterhooks.
“There is considerable concern about the potential for infection,” analysts at New York-based Bespoke wrote in a research note on Tuesday. “But so far this concern is not visible in parts of the credit markets, which have in the past acted well as red flags for a wider credit crunch.”
Evergrande is set to pay its onshore bonds on time, but the developer has not indicated whether it will be able to pay the $83.5 million in interest due on the March 2022 bond as of Thursday. It has a further $47.5 million payment due on September 29 for the March 2024 notes.
Both bonds will default if evergrande Fails to settle the interest within 30 days of the scheduled payment dates.
Bloomberg reports https://www.bloomberg.com/news/articles/2021-09-21/evergrande-misses-loa n-payments-to-banks Evergrande on Monday reported at least two of its biggest The bank did not pay interest to the creditors. -as-bonds-deadline-looms Tuesday, citing people familiar with the matter. Bloomberg said the missed payment was to be expected as China’s housing ministry said the company would be unable to make payments on time.
As investors and policymakers around the world try to assess the potential repercussions, Securities and Exchange Commission (SEC) Chairman Gary Gensler said the US market has been on the cusp of a major corporate default since 2007 to absorb potential global shocks. In better condition than before. -2009 financial crisis.
fed meeting
Fed Chair Jerome Powell is likely to be asked about Evergrande’s results when he speaks after a two-day Fed meeting that ends Wednesday at 2 p.m. ET (1800 GMT).
Despite the impending default, some funds have been increasing their positions in recent months. Fund giant BlackRock and investment banks HSBC and UBS are among the biggest buyers of Evergrande’s debt, data and a blog post showed.
Other bondholders include UBS Asset Management and Amundi, Europe’s largest asset manager.
In any default scenario, between Evergrande, a looming recession, a managed collapse or the unlikely event of a bailout by Beijing, the bonds will need to be restructured, but analysts expect a lower recovery ratio for investors.
S&P Global Ratings on Monday said it believes the Chinese government will act only in the event of a far-reaching contagion that poses systemic risks to the economy.
“I would characterize Evergrande as a telegraphed and controlled explosion,” said Sammy Muaddi, portfolio manager at the $5.1 billion T. Rowe Price Emerging Markets Bond Fund.
BNP Paribas estimated in a research note that less than $50 billion of Evergrande’s $300 billion in outstanding debt is financed by bank loans, suggesting that the Chinese banking sector has potential to absorb bad loans. There will be enough buffer to do this.
Subsidiaries of Citigroup Inc. act as trustees and payment agents for the China Evergrande bond that matures in March 2022 and has $83.5 million in interest due Thursday.
“We have no direct credit exposure to Evergrande; our indirect exposure through counterparty credit risk is small and there is no significant concentration,” Citigroup spokesman Danielle Romero-Epsilos said in an email on Tuesday. She declined to comment on Evergrande’s scheduled payments.
In an effort to revive battered trust in the firm, Evergrande President Hui Ka Yuan said in a letter to employees that Evergrande will fulfill responsibilities to asset buyers, investors, partners and financial institutions.
Hong Kong-listed shares of Evergrande fell as much as 7% on Tuesday, falling 10% the previous day, on fears that a collapse from its $305 billion debt could cause widespread damage to China’s financial system. Hong Kong’s stock market remained closed on Wednesday for a holiday.
US stock futures, the yuan and the risk-sensitive Australian dollar rose, while safe-haven assets such as the yen and US Treasury slipped.
Hengda Real Estate Group It will make coupon payments on its Shenzhen-traded 5.8% September 2025 bond on time on September 23, it said in a statement.
The announcement comes as Evergrande, once the country’s best-selling developer, is nearing a crucial deadline for interest payments on dollar bonds, with tensions in financial markets as well as investors and analysts in the country. He minimized the risk of his troubles becoming a “Lehman”. Moment.”
According to Refinitiv data, Hengda Real Estate’s coupon payments totaled 232 million yuan ($35.88 million).
Trading in Evergrande’s onshore exchange-traded bonds has been halted since September 16, when Hengda Real Estate applied to suspend trading for a day. While trading technically resumed on September 17th, it is now only through negotiations which traders said were an attempt to contain volatility.
While markets were volatile on Monday, US stocks were flat on Tuesday and Chinese stocks opened sharply lower after a two-day public holiday. But China’s wealth index later posted losses and gained more than 3%, while banking stocks fell nearly 3%.
Evergrande is so closely tied to China’s broader economy – from retail investors to infrastructure firms that are a gauge for demand for global goods – that fears of contagion have put financial markets on tenterhooks.
“There is considerable concern about the potential for infection,” analysts at New York-based Bespoke wrote in a research note on Tuesday. “But so far this concern is not visible in parts of the credit markets, which have in the past acted well as red flags for a wider credit crunch.”
Evergrande is set to pay its onshore bonds on time, but the developer has not indicated whether it will be able to pay the $83.5 million in interest due on the March 2022 bond as of Thursday. It has a further $47.5 million payment due on September 29 for the March 2024 notes.
Both bonds will default if evergrande Fails to settle the interest within 30 days of the scheduled payment dates.
Bloomberg reports https://www.bloomberg.com/news/articles/2021-09-21/evergrande-misses-loa n-payments-to-banks Evergrande on Monday reported at least two of its biggest The bank did not pay interest to the creditors. -as-bonds-deadline-looms Tuesday, citing people familiar with the matter. Bloomberg said the missed payment was to be expected as China’s housing ministry said the company would be unable to make payments on time.
As investors and policymakers around the world try to assess the potential repercussions, Securities and Exchange Commission (SEC) Chairman Gary Gensler said the US market has been on the cusp of a major corporate default since 2007 to absorb potential global shocks. In better condition than before. -2009 financial crisis.
fed meeting
Fed Chair Jerome Powell is likely to be asked about Evergrande’s results when he speaks after a two-day Fed meeting that ends Wednesday at 2 p.m. ET (1800 GMT).
Despite the impending default, some funds have been increasing their positions in recent months. Fund giant BlackRock and investment banks HSBC and UBS are among the biggest buyers of Evergrande’s debt, data and a blog post showed.
Other bondholders include UBS Asset Management and Amundi, Europe’s largest asset manager.
In any default scenario, between Evergrande, a looming recession, a managed collapse or the unlikely event of a bailout by Beijing, the bonds will need to be restructured, but analysts expect a lower recovery ratio for investors.
S&P Global Ratings on Monday said it believes the Chinese government will act only in the event of a far-reaching contagion that poses systemic risks to the economy.
“I would characterize Evergrande as a telegraphed and controlled explosion,” said Sammy Muaddi, portfolio manager at the $5.1 billion T. Rowe Price Emerging Markets Bond Fund.
BNP Paribas estimated in a research note that less than $50 billion of Evergrande’s $300 billion in outstanding debt is financed by bank loans, suggesting that the Chinese banking sector has potential to absorb bad loans. There will be enough buffer to do this.
Subsidiaries of Citigroup Inc. act as trustees and payment agents for the China Evergrande bond that matures in March 2022 and has $83.5 million in interest due Thursday.
“We have no direct credit exposure to Evergrande; our indirect exposure through counterparty credit risk is small and there is no significant concentration,” Citigroup spokesman Danielle Romero-Epsilos said in an email on Tuesday. She declined to comment on Evergrande’s scheduled payments.
In an effort to revive battered trust in the firm, Evergrande President Hui Ka Yuan said in a letter to employees that Evergrande will fulfill responsibilities to asset buyers, investors, partners and financial institutions.
Hong Kong-listed shares of Evergrande fell as much as 7% on Tuesday, falling 10% the previous day, on fears that a collapse from its $305 billion debt could cause widespread damage to China’s financial system. Hong Kong’s stock market remained closed on Wednesday for a holiday.
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