Evergrande reportedly missed its $83.53 million March 2022 bond payment that was due today

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Reuters says they have a 30 day grace or is that is whats up?

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The reality is that even as of this moment, the company is facing a default on its offshore bonds which have a $83.5 million interest payment due on Sept 23 on the 8.25% bonds due 2022. Incidentally, these same bonds traded down 0.7 cent to 24.5 cents, according to Bloomberg-compiled prices, suggesting that creditors still expect a full default.

“Evergrande might have arrived at some kind of standstill with onshore holders,” said Daniel Fan, a credit analyst at Bloomberg Intelligence. “They might have asked them not to act, pending for negotiation for a rescheduling or something of that sort.”

But the biggest problem, as represented in the chart below, is that whether it is local or foreign, the company has billions of debt payments due in coming months and years. Just in the next 3 months, the developer owes $669 million in interest through the end of this year, including $83.5 million for the coupon payment due Sept. 23 on the dollar bond. There’s a 30-day grace period before a missed payment on that note would become a default, according to the bond covenants.

The bottom line is that absent a wholesale restructuring with local creditors which will certainly involve impairments – and potentially pressure from Beijing – Evergrande simply does not have the capacity to make payment-by-payment arrangements with its countless creditors, and thus last night’s announcement has just delayed the inevitable. As for foreign bondholders, expect to be crammed down to the very bottom of the stock, perhaps even below the equity: after all Xi has to make someone pay.

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What are the repercussions from this?

Haven't been following this story

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As for foreign bondholders, expect to be crammed down to the very bottom of the stock, perhaps even below the equity: after all Xi has to make someone pay.

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