Evergrande staves off default, paying US$83.5 million of overdue offshore bond coupon before 30-day grace period runs out

Evergrande wired the payment due on its 8.25 per cent, US$2.03 billion bond maturing in March 2022 to Citibank on Thursday, according to separate reports

Evergrande missed the payment on its offshore debt on September 23 and was given 30 days grace until this weekend before being declared in default

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Evergrande Group’s headquarters in Shenzhen. Photo: EPA-EFE

Published: 1:35pm, 22 Oct 2021Updated: 10:39pm, 22 Oct 2021

China Evergrande Group paid the US$83.5 million interest payment on its offshore bond, just before a 30-day grace period runs out for declaring it in default, as the world’s most indebted developer took action to assure a capital market on edge about the spectre of the nation’s highly leveraged property sector.

The Shenzhen-based developer wired the payment due on its 8.25 per cent, US$2.03 billion bond maturing in March 2022 to Citibank on Thursday, according to separate reports by the state-run China Securities Times newspaper and Reuters, both citing unidentified sources. Evergrande did not respond to a request for confirmation while Citibank, the bond’s trustee, declined to comment.

Evergrande missed paying the coupon on September 23, and was given a 30-day grace period to comply before it was being declared in default, which could trigger cross defaults on much of its offshore debt and in the worst case set the stage for bondholders to petition for its liquidation. The developer negotiated an “off-exchange resolution on a separate 4 billion yuan (US$618 million) senior note before a separate deadline last month.

Evergrande, with more than US$300 billion in liabilities, is hardly out of the woods, as it missed five interest payments on its offshore debt in September and October, including Thursday’s coupon payment. It has two coupon payments totalling US$235 million due on Sunday.

Its track record was better with onshore debt, as Evergrande made what it called its “best effort” to comply, paying the interest this week due on a 2.1 billion yuan senior note that matures in October 2025.

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