Down Debt

Evergrande shares in China hit a new low amid the debt crisis; Kaisa misses her pay date

The China Evergrande Group logo is seen at the real estate developer’s headquarters in Shenzhen, Guangdong Province, China on September 26, 2021. REUTERS / Aly Song / File Photo

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  • Debt Restructuring Hopes Keep Floor Under Evergrande Shares
  • Evergrande has not yet confirmed the defect
  • “The market will want to wait and see and not give up just yet” -analyst
  • Trading in Kaisa shares suspended

HONG KONG, Dec.8 (Reuters) – Shares of China Evergrande group hit an all-time high on Wednesday after a missed debt payment deadline put the developer at risk of becoming the country’s biggest defaulter, so even as hopes of a managed debt restructuring have calmed fears of a collapsing mess.

So far, any fallout from Evergrande (3333.HK) has been largely contained, and with increasingly vocal policymakers and markets more familiar with the problem, the consequences of its problems are less likely to be be widely felt, market watchers said.

Evergrande’s failure to make $ 82.5 million in interest payments due Nov. 6 on certain U.S. dollar bonds would trigger a cross-default on its roughly $ 19 billion international bonds, with possible ramifications for l Chinese economy and beyond.

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While the 30-day grace period has ended, Evergrande has not announced whether the bonds are formally in default.

The developer did not immediately respond to a request for comment from Reuters.

“Without the official announcement, the market will want to wait and see and not give up just yet, otherwise the prices of Evergrande stocks and bonds would have had to fall a lot more,” said Steven Leung, director of UOB Kay Hian in Hong Kong.

“The market also wants to wait and see what can be done with local government intervention now,” Leung added, referring to the decision by the home province of Evergrande to help contain the risk.

Evergrande was once China’s leading real estate developer, with more than 1,300 real estate projects. With $ 300 billion in liabilities, it is now at the heart of a real estate crisis in China this year that has crushed nearly a dozen small businesses.

Trading in shares of Kaisa Group Holdings (1638.HK) was suspended on Wednesday, after a source with direct knowledge of the matter said it was unlikely to meet its $ 400 million debt deadline. offshore Tuesday. Read more

Kaisa, the largest holder of offshore debt in China among developers after Evergrande, had failed to repay the 6.5% bond by the end of business hours in Asia, the person said, which could push ratings. in technical default, triggering cross defaults on its offshore bonds totaling nearly $ 12 billion.

Kaisa declined to comment.

Bondholders holding more than 50% of the notes in question sent the company’s draft forbearance terms on Monday evening, a source told Reuters.

Even in the event of a technical failure, Kaisa and the offshore bondholders would continue discussions, two sources familiar with the matter said.


Evergrande shares, which fell more than 20% this month, fell 6% in the afternoon to HK $ 1.72, the lowest since their debut in November 2009. The market in the sense large (.HSI) was stable.

Its notes maturing last month, one of two tranches whose coupon payment deadline expired on Monday, traded at 18.613 cents to the dollar, according to Duration Finance data, up from 18.875 at Tuesday’s close. in Asia.

The Kaisa Bond due April 2022 was trading at 36.397, little change from the previous day, but down from 37.89 last week.

The government has repeatedly stated that Evergrande’s problems can be contained and that measures to increase liquidity in the banking sector as well as the company’s plans to continue restructuring its debt abroad have helped reassure global investors.

The Guandong provincial government, where Evergrande is based, intervened last week to help manage the fallout, reinforcing the idea that its failure would be managed.

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Reporting by Anne Marie Roantree and Donny Kwok; Editing by Himani Sarkar

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