China Evergrande Group Defaults

Posted on 11/10/2021

UPDATE: At 11:52 PST, Evergrande was said to pay delayed interest on at least two bonds.

UPDATE: At 11:22 AM PST, China Evergrande Group made a debt payment on at least one of its bonds (one that matures in 2022).

China Evergrande Group, a major Chinese real estate developer, has defaulted on US$ 148 million worth of bonds after failing to pay it within the 30-day grace period. Evergrande has become the poster child of China’s property crisis. Evergrande is also the world’s most real estate developer.

China Evergrande Group has more than US$ 300 billion in liabilities. US$ 19 billion of that amount are in international bonds. China Evergrande Group is looking at circa US$ 8 billion worth of debt obligations due to foreign investors over the next year. The company’s billionaire founder and chairman may have to pay at least some of that out of his own net worth.

DMSA Deutsche Markt Screening Agentur GmbH, is an independent data service that collects and evaluates market-relevant information on companies, products and services. DMSA said in its letter, “Evergrande officially defaulted – DMSA is preparing bankruptcy proceedings against Evergrande Group China Evergrande Group today again defaulted on interest payments to international investors. DMSA itself is invested in these bonds and has not received any interest payments until today’s end of the grace period. Now DMSA is preparing bankruptcy proceedings against Evergrande and calls on all bond investors to join it. China Evergrande Group, the second largest real estate developer in China, defaulted on interest payments on two bonds back in September, with the 30-day grace period still ending in October. However, shortly before the end of the grace period, the public was misled by rumors about alleged interest payments. The international media also took the rumors for granted. Only the DMSA – Deutsche Marktscreening Agentur (German Market Screening Agency) already recognized the default at that time and proved in a study that the bankruptcy of Evergrande, the world’s most indebted corporation, could ultimately lead to a “Great Reset”, i.e. the final meltdown of the global financial system.”

DMSA is preparing bankruptcy proceedings against Evergrande Group.

Bond Name Regular Coupon Payment Date End of the Goodwill Period Total Interest Payment in USD Millions
EVERRE 8.25% due 2022 2021.09.21 22.10.2021 83.53
EVERRE 9.5% due 2024 2021.09.29 28.10.2021 45.17
Total not paid in October 2021     128.7
EVERRE 9.5% due 2022 2021.10.11 2021.11.10 68.88
EVERRE 10% due 2023 2021.10.11 2021.11.10 42.5
EVERRE 10.5% due 2024 2021.10.11 2021.11.10 32.75
Total not paid in November 2021     148.13

Source: DMSA

More than 90% of Evergrande’s creditors are from China. Some major asset owner creditors of the company based off filing data include Temasek Holdings, Government Pension Investment Fund Japan, Assicurazioni Generali SpA, and St James’s Place PLC. Some of the largest asset managers exposed to China Evergrande include FIL Ltd., BlackRock, Ashmore Group PLC, UBS Group AG, Allianz SE, Prudential PLC, Royal Bank of Canada, and HSBC Holding plc.

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