Evergrande default is ‘looking inevitable’ as payment missed

Evergrande edges closer to default after some investors reported they had not received a key bond payment despite extension.

Evergrande City Plaza shopping centre in Beijing, China. Picture: Getty

Evergrande edged closer to a formal default on Tuesday after some of its investors reported that they had not received a key bond payment due on Monday, even after giving the Chinese property developer an extra month to pay.

The heavily indebted group, whose troubles earlier in the year unsettled global markets, had been due to pay $82.5 million to bondholders at the beginning of November.

However, short on cash, it managed to negotiate a 30-day grace period, which ended on Monday. Investors have said that they have still not received the money though, according to Reuters, which cited five people with knowledge of the matter. Two investors also confirmed to the Financial Times that they were yet to receive payment.

Analysts at S&P, the credit ratings agency, said that a default now “looks inevitable for Evergrande”.

Evergrande was once China’s top-selling developer but built up debts of more than $300 billion as it expanded rapidly and there have been concerns that its collapse could send shockwaves through the economy. It was founded in 1996 by Hui Ka Yan, once China’s richest man. It claims to have built homes for more than 12 million people.

Evergrande has rarely discussed late and missed repayments in its financial filings. However, on Monday it said it was setting up a risk management committee to help bosses in “mitigating and eliminating future risks”. Evergrande shares, which have lost nearly 90 per cent of their value this year, edged 1 per cent higher having fallen to a record low in the previous session.

The Times