Evergrande pays delayed interest on at least two bonds, looking to avoid default

Customers of international clearing firm Clearstream received overdue interest payments on three U.S. Dollar bonds issued by Evergrande, a spokesperson for Clearstream said. Two investors that hold two of the bonds confirmed that they received the payments, asking not to be identified because they weren’t authorized to speak publicly.

Investors had been waiting to see if the embattled developer would make the coupon payments totaling $148.1 million before the end of 30-day grace periods on Wednesday. Evergrande missed the initial interest deadlines last month, Bloomberg-compiled data show.

The affected bonds include a 9.5% note due 2022, 10% bonds due 2023, and its 10.5% note due 2024. 

The property giant pulled back from the brink of default in October by paying other coupons before the end of its grace period. But the crisis at Asia’s largest junk bond issuer is hardly over, as it grapples with more than $300 billion in liabilities. A string of other developers have also fallen into distress amid a crackdown on speculation and leverage following years of debt-fueled expansion. The contagion has even spread to other areas of the credit market.

On Monday, two holders of other dollar notes sold by a unit of China Evergrande said they hadn’t received payment for coupons that were officially due Saturday. Both of those coupons also have a 30-day grace period before any missed payment would be considered a default.

A representative for Evergrande didn’t immediately respond to a request for comment sent outside of normal business hours. 

Authorities have sought to limit the fallout from the wider property market distress, with the central bank injecting liquidity into the financial system. Chinese developers’ bonds and stocks rallied Wednesday after the Securities Times said authorities are likely to loosen controls for the nation’s real estate companies to issue local-currency notes, part of efforts to prevent a further deterioration in their financing.

But concerns persist. A string of defaults and downgrades in the property industry in recent weeks pushed yields on junk dollar bonds from Chinese issuers to the highest in at least a decade over 24%. 

—With assistance from Allison McNeely

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