(Bloomberg) – Holders of dollar bonds in the China Evergrande group remain on the alert after the developer makes no announcement on whether it will meet Thursday’s deadline for a coupon payment of $ 83.5 million. European banks are trying to reassure investors that their exposure to the struggling developer is limited, while staff in the company’s electric vehicle unit have not been paid.
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Evergrande stocks and bonds traded lower after the deadline passed, following a rally on Thursday. Shares fell 3.4% to HK $ 2.58 in Hong Kong at 10:15 a.m. The electric vehicle unit plunged 23%. Evergrande’s 8.25% dollar bond due 2022 was listed down 1.7 cents on the dollar to 30.3 cents, according to prices compiled by Bloomberg. He jumped the most in 18 months on Thursday.
Here are the latest developments from the Chinese real estate giant:
Evergrande Bondholders Say Still Receiving Interest (10:15 HK)
Three holders of an Evergrande Chinese dollar bond with a coupon due on Thursday said they did not receive payment by 8 a.m. Hong Kong time on Friday. There was no immediate response from Evergrande to questions about the payment of interest. The holders asked not to be identified because the case is private
Evergrande remains silent on bond interest payment (8:35 a.m. HK)
The absence of any announcement from Evergrande of an $ 83.5 million interest payment due Thursday on a dollar bond adds to the uncertainty surrounding the developer’s struggles.
Asia’s largest publicly traded dollar bond issuer has so far not made any stock market deposits or public announcements regarding the coupon. Evergrande, the world’s most indebted developer, has a 30-day grace period to make payment before an event of default can be declared. Investors have factored in a significant chance of a missed payment or getting a small fraction of face value in any potential restructuring.
China urges Evergrande to avoid default and reimburse retail investors
Beijing financial regulators have issued a wide range of instructions to Evergrande, urging the struggling developer to take all possible steps to avoid a short-term default on dollar bonds while focusing on completing unfinished properties. and repayment of individual investors.
In a recent meeting with representatives from Evergrande, regulators said the company should proactively communicate with bondholders to avoid default, but did not give more specific advice, said one. person close to the case.
There is no indication that regulators have offered financial support to Evergrande for the payment of the bonds, and it is unclear whether officials think the company should eventually impose losses on offshore creditors. Policymakers are trying to find out more about who owns Evergrande bonds, the person said, asking not to be identified while discussing sensitive information.
Banks rush to ensure Evergrande exposure is limited
European bankers have spent the past few days reassuring investors, clients and regulators of all the fallout from Evergrande as questions swirl over the world’s most indebted real estate developer.
Credit Suisse Group AG, which has underwritten the largest number of Evergrande bonds among international banks in the past 10 years, has issued statements showing that funds in its asset management unit do not hold much of the the developer’s debt. He also contacted shareholders about the bank’s minimum exposure level, according to a person briefed on the discussions.
UBS Group AG’s risk is “intangible” and limited to the execution of collateral calls on margin loans, CEO Ralph Hamers said on Thursday. This came a day after Noel Quinn of HSBC Holdings Plc told a Bank of America Corp. conference. that he wasn’t worried about the bank’s direct ties to Chinese real estate.
Evergrande’s EV unit has stopped paying factory staff and suppliers
China Evergrande’s electric car unit has defaulted on the payment of wages to some of its employees and has fallen behind in paying a number of suppliers for factory equipment, people familiar with the matter say. proof that the real estate developer’s debt problems have an impact beyond his business heart.
The cash flow difficulties mean that China Evergrande New Energy Vehicle Group Ltd. will likely miss its target of starting mass deliveries next year as test production of electric vehicles at its Shanghai and Guangzhou factories has been canceled, the people said, asking not to be identified as they are not allowed to speak in public.
Most Evergrande NEV employees get paid at the start of each month and again on the 20th, but for some middle managers, the second installment for September hasn’t arrived, people said. Several equipment suppliers, meanwhile, began withdrawing their on-site staff from the Shanghai and Guangzhou sites as early as July after payments for machines at Evergrande NEV factories were not made.
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