The month-long uncertainty has come to an end, and just in time. The Chinese real estate company Evergrande has indeed paid interest on bonds amounting to $83.5 million on Thursday, despite missing the deadline on September 23.
It did so during the so-called ‘grace period’ of 30 days before this non-payment would have resulted in a default, which would have expired this Saturday, October 23.
Although Evergrande’s over-indebtedness has heightened uncertainty in the market, as well as the question of whether it will be able to meet its obligations, the news of the payment immediately boosted Evergrande’s dollar bonds and shares. According to Bloomberg, Evergrande’s dollar bonds increased by three cents on the dollar, while its shares on the Hong Kong Stock Exchange rose by five percent. The payment was also reported earlier by the U.S. state newspaper Securities Times.
However, the months-long drama that has worried global investors shows no signs of ending. Evergrande still needs to pay more interest this year, and it has a substantial amount of debt in onshore and offshore bonds maturing next year – as much as $7.4 billion. Later this month, Evergrande also needs to pay interest on bonds worth $45.2 million.
Evergrande’s total debt amounts to as much as $305 billion.
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