- Evergrande has to find over $500 million to meet its coupon payments by the end of the year.
- If it fails to meet its obligations, Evergrande could become the second-biggest emerging market corporate debt defaulter.
- It could recover from its cash crunch by boosting contracted sales and via asset disposals, analysts suggest.
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Evergrande, the cash-strapped Chinese property developer, has to find more than $500 million to pay to its bondholders by the end of this year.
Although it is one of China's largest residential developers, it's struggling with a debt pile worth $305 billion.
With such massive liabilities, investors initially worried its money troubles could spread across the financial system and hit global markets. But these worries have somewhat cooled after the central bank pledged to protect homebuyer interests.
Evergrande, based in Shenzhen, recently said it has resumed construction work on nearly a dozen projects after unexpectedly making a last-minute dollar bond payment worth $83.5 million. The company didn't specify how it managed to raise the funds.
In an August 31 filing, Evergrande said it suspended construction at several projects, many of which were already sold, without laying out much detail. But it cited delays in supplier payments and construction fees for the stoppage.
Evergrande has warned it might default on its debt if its liquidity problem can't be resolved. Analysts suggest the company can shore up its cash holdings both by boosting contracted sales and via asset disposals, but neither of these areas is free of hurdles.
The developer already missed three rounds of coupon payments totaling near $280 million between September and October. But it avoided one problem by paying an $83.5 million payment due within a 30-day grace period, thereby avoiding official default.
While it doesn't have further onshore or overseas debt maturing this year, it's still required to pay out interest on offshore bonds worth nearly $240 million between November 1 and December 28. That's in addition to $196 million in missed payments.
It next needs to come up with $47.5 million for a grace period payment due on October 29, and another $338 million in offshore interest payments due in November and December.
If it fails to meet any of those deadlines in the coming weeks, it would join the list of the biggest-ever emerging market corporate debt defaults, topped right now by Venezuela's state-owned oil firm Petroleos de Venezuela (PDVSA).
Here's a breakdown of upcoming dollar bond payments for Evergrande and its subsidiaries, according to data compiled by Reuters:
Bond | Outstanding amount | Next coupon date | Next coupon amount |
Scenery Journey 13% Nov. 2022 | $645 mln | Nov. 6, 2021 | $41.93 mln |
Scenery Journey 13.75% Nov. 2023 | $590 mln | Nov. 6, 2021 | $40.56 mln |
China Evergrande 7.5% June 2023 | $1.34 bln | Dec. 28, 2021 | $50.43 mln |
China Evergrande 8.75% June 2025 | $4.68 bln | Dec. 28, 2021 | $204.77 mln |
China Evergrande 11.5% Jan. 2023 | $1 bln | Jan. 22, 2022 | $57.5 mln |
China Evergrande 12% Jan. 2024 | $1 bln | Jan. 22, 2022 | $60 mln |
Scenery Journey 11.5% Oct. 2022 | $2 bln | Jan. 24, 2022 | $115 mln |
Scenery Journey 12% Oct. 2023 | $2 bln | Jan. 24, 2022 | $120 mln |
China Evergrande 8.25% March 2022 | $2.025 bln | Mar. 23, 2022 | $83.53 mln (at maturity) |
China Evergrande 9.5% March 2024 | $1 bln | Mar. 29, 2022 | $47.5 mln |
China Evergrande 9.5% April 2022 | $1.45 bln | Apr. 11, 2022 | $68.88 mln (at maturity) |
China Evergrande 10% April 2023 | $850 mln | Apr. 11, 2022 | $42.5 mln |
China Evergrande 10.5% April 2024 | $700 mln | Apr. 11, 2022 | $36.75 mln |