China Evergrande wires funds for bond coupon, averting default

China Evergrande Group wired funds to a trustee account on Thursday for a greenback bond curiosity fee due Sept. 23, a supply informed Reuters on Friday, days earlier than a deadline that will have plunged the embattled developer into formal default.
The supply corroborated a narrative within the state-backed Securities Times on Friday that the corporate had remitted $83.5 million in coupon funds to a trustee account at Citibank on Thursday, permitting it to pay out to all bond holders earlier than the grace interval expires on Oct. 23.
“They seem to be avoiding short-term default and it’s a bit of a relief that they have managed to find liquidity,” stated a Hong Kong-based restructuring lawyer representing some bondholders.
“But still, Evergrande does need to restructure its debt. This payment might be a way for them to get some sort of buy-in with stakeholders before the heavy work needed on the restructuring.”

Evergrande didn’t instantly reply to Reuters request for remark. Citi declined to remark.
News of the wired fee comes a day after monetary data supplier REDD reported on Thursday that the corporate had secured extra time to pay a defaulted bond issued by Jumbo Fortune Enterprises and assured by Evergrande.
A string of Chinese officers in latest days have sought to reassure buyers, saying that collectors’ pursuits can be protected. Market individuals nonetheless expressed shock at information of the fee.
“This is a positive surprise,” stated James Wong, portfolio supervisor at GaoTeng Global Asset Management Ltd, including many had anticipated a default.
The information would increase bondholders’ confidence, he stated, as “there are many coupon payments due ahead. If Evergrande pays this time, I don’t see why it won’t pay the next time.”
Evergrande missed two coupon funds on its greenback bonds on Sept. 23 and Sept. 29, beginning the clock on 30-day grace intervals for fee. Non-payment of curiosity for 30 days would end in a proper default by the corporate, and set off cross-default provisions for different Evergrande greenback bonds.
Evergrande’s greenback bonds surged on Friday morning, with its April 2022 and 2023 notes leaping greater than 10%, in response to knowledge supplier Duration Finance.

Evergrande’s shares rose about 4%, a day after the resumption of commerce following a greater than two-week suspension pending the announcement of a scrapped stake sale in its property administration unit.
The Hang Seng mainland properties index surged greater than 5% in early commerce, towards a 0.13% rise within the broader Hang Seng index.