News24com Moment of truth arrives for crisis-hit Chinese property giant Evergrande

Evergrande is also scheduled to pay interest on bank loans Monday, with a one-day grace period. Monday and Tuesday are public holidays in China. While details on the amount due aren’t publicly available, Chinese authorities have already told major lenders not to expect repayment, people familiar with matter said last week. Evergrande and banks are discussing the possibility of extensions and rolling over some loans, the people said.

Bond investors are rushing to lock in professional help as a potential restructuring for Evergrande edges closer to reality. Addleshaw Goddard has engaged with some of the company’s bondholders and is preparing to establish a creditor committee to negotiate with Evergrande, according to a person familiar with the matter.

Separately, Evergrande kicked off a process on Saturday to repay investors in its overdue investment products with discounted properties. Investors who opt for discounted real estate in lieu of cash can start contacting wealth managers for more details, Evergrande’s wealth division said in a post on its Wechat account. 

More than 70,000 people bought the products, including many Evergrande employees, Bloomberg reported earlier, citing an executive of Evergrande’s wealth division. About 40 billion yuan of the products are now due, Caixin reported. 

Evergrande’s debt pile includes about 571.8 billion yuan of borrowings from banks and other financial institutions such as trusts, with 240 billion yuan due in less than one year. The average borrowing cost stood at 9.02% as of June 30. A portion of Evergrande’s borrowings was secured by a pledge of its properties and equipment, land use rights, cash held at banks and the equity interests of certain subsidiaries.

China Minsheng Banking, Agricultural Bank of China and Industrial & Commercial Bank of China were among the developer’s principal banks at the end of last year.

Whether the selloff in Evergrande bonds drags down the broader credit market may depend on the company’s ability to buy time with banks. A messy default on loans could stoke fears of widespread contagion, something Xi Jinping’s government has been keen to avoid even as it tightens financing restrictions on overstretched developers and discourages government bailouts.

- With assistance from Jun Luo.

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