Evergrande buys six months of breathing room as bondholders approved its plea to defer payments to avert defaulting on an onshore bond

Holders of a 4.5 billion yuan onshore bond due in January 2023 agreed to extend the January 8 redemption and coupon payment deadline by six months

The deadline loomed after bondholders exercised a put option on January 8, demanding payment from Evergrande a year before the bond matures

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Unfinished apartment buildings at the construction site of a China Evergrande Group development in Beijing on January 6, 2021. Photo: Bloomberg

Published: 1:20pm, 14 Jan 2022

China Evergrande Group’s bondholders approved its plea to defer paying on a yuan-denominated bond, giving the world’s most indebted property developer breathing room to pare its debt and avert its first default on an onshore financial instrument.

Investors holding more than 72.3 per cent of the principal of a 4.5 billion yuan (US$708 million onshore bond due in January 2023 agreed to extend the January 8 redemption and coupon payment deadline by six months, according to a statement to the Shenzhen Stock Exchange by Evergrande’s Hengda Real Estate Group unit.

The deadline loomed after bondholders exercised a put option on January 8, demanding payment from Evergrande a year before the bond matures. The developer had proposed to meet bondholders last week to extend the deadline, but delayed the meeting to Thursday, according to the statement.

The six-month breathing room offers some relief to Evergrande, which still faces 1.97 trillion yuan of liabilities, a debt load that had forced it into disposing of its assets, surrender unused land to the government, suspend certain construction projects, and move its headquarters from Shenzhen to one of its own buildings in Guangzhou.

At least US$186.1 million of offshore bonds are due by the end of January, with another US$2 billion in offshore bond payments due in March, followed by US$1.045 billion in April, according to a schedule of payments compiled by the Post. Evergrande’s spokespeople declined to comment.