What’s new: Debt-ridden China Evergrande Group put aside HK$13.6 billion ($1.75 billion) to repay U.S. dollar bonds due Monday and the interest on all offshore bonds, the company said Thursday.
The troubled property developer has no publicly listed bonds due before March 2022, Evergrande said. The Hong Kong-listed shares of Evergrande and its affiliates jumped.
After the $1.45 billion of dollar bonds are paid off, Evergrande will still have about $17 billion of outstanding bonds, all offshore dollar debt. The next bond due will be a $2 billion, 8.25% issue that matures March 23, 2022, data from Wind Information Technology Co. Ltd. shows.
The company’s main property unit had bond balances of 45.3 billion yuan ($7 billion) at the end of 2020, and its next bond due is an 8.2 billion yuan issue due July 8, 2022, Evergrande Group’s annual report shows.
While Evergrande and its affiliates haven’t defaulted on any interest or principal payments, the almost nine months with no debt immediately coming due may give the company some breathing room, although concerns about its funding chain remain, analysts said.
The background: Evergrande continues to struggle with a shortage of cash as it tries to reduce debt to meet real estate industry regulatory requirements. The company delayed repayment on some commercial paper, a kind of short-term debt security, in some cases by more than one month, according to several holders of the debt.
The company has been trying to increase cash flow by offering big discounts on the homes it sold over the past few months. In late May, Evergrande rolled out a promotion that gave homebuyers discounts of as much as 30% to 40% if they could pay for a property entirely in cash, multiple company staff said.
At the end of last year, Evergrande remained in violation of every key measure of government policies limiting borrowing in the real estate industry, Bloomberg reported.
Evergrande Chairman Xu Jiayin has vowed to meet at least one of the three key measures by the end of this month and cut interest-bearing liabilities to less than 600 billion yuan.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)
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