Suning founder Zhang Jindong who helped Evergrande avoid cash crunch faces reality check from bond market

Prices of bonds issued by Zhang’s companies have plunged to record lows after he decided not to demand repayment of a US$3 billion investment in Evergrande

Suning group has to repay about US$4.3 billion in bond maturities by the end of 2021, including its largest monthly repayment on record in December

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Some of Suning’s private bonds were quoted at prices as low as 70 yuan in the past month, according to traders. Photo: Jamie Carter

Published: 9:10am, 10 Nov 2020Updated: 9:10am, 10 Nov 2020

Less than two months after billionaire Zhang Jindong helped China Evergrande Group avoid a cash crunch, the founder of Suning Appliance Group is getting his own reality check from the bond market.

Prices for several local bonds issued by Zhang’s companies have plunged to record lows after he decided not to demand repayment of a 20 billion yuan (US$3 billion) strategic investment in Evergrande. The tycoon was among a group of investors who agreed in late September to keep their money in the developer after fears of a liquidity squeeze sent its bonds tumbling.

Zhang’s decision came as a surprise to some investors because Suning’s management had said earlier that month it planned to demand the return of its money to repay debt if Evergrande failed to succeed in a domestic stock listing by January. Suning and its flagship e-commerce platform face the equivalent of US$4.3 billion in local and dollar bond maturities by the end of 2021, including Suning’s largest monthly repayment on record in December.

“How will Suning repay its debt given that it will not take back its investment in Evergrande? This is the question investors have been asking,” said Deng Hao, chief executive of Beijing GEC Asset Management.

Suning’s chairman Zhang Jindong attends a news conference to announce the acquisition of Italy’s Inter Milan football club, in Nanjing, China, on June 6, 2016. Photo: Reuters

Some of Suning’s private bonds were quoted at prices as low as 70 yuan in the past month, according to traders. Local yuan bonds issued by Suning.com, the e-commerce platform, have fallen by as much as 11 per cent since late September to record lows. Among them, a 4.9 per cent yuan note due 2023 closed on Monday at 78.8 yuan, implying a yield of around 33 per cent, according to prices compiled by Bloomberg.