Evergrande has reportedly paid off $83.5 million worth of interest in dollar bonds ahead of deadline to avoid default

A view of the Evergrande Center, which hosts the regional HQ of Evergrande Group, in Shanghai, China Thursday, Sept. 16, 2021.
Evergrande Center in Shanghai, China.

  • China Evergrande has transferred funds to pay $83.5 million in bond interest payments ahead of a weekend deadline.
  • It had already missed the payment on Sept. 23, but had a 30-day grace period before it’s considered a default.
  • News of the payment sent Evergrande’s dollar bonds up, Bloomberg reported.

Embattled real estate giant China Evergrande has wired $83.5 million to pay the interest on an offshore dollar bond, reported state-owned Securities Times.

The transfer yesterday came just days ahead of a closely watched deadline this weekend.

The property developer had already missed the Sept. 23 deadline for the interest payment, and had a 30-day grace period before it would be considered a default, according to Bloomberg.

This amplified uncertainty in the market over whether the debt-laden real estate developer would be able to meet obligations.

News of the payment sent Evergrande’s dollar bonds up 3 cents on the dollar, Bloomberg reported, citing credit traders.

Evergrande is facing several more deadlines on bond payments it has already missed, as well as those on upcoming ones. It has another interest payment worth $45.2 million due to bondholders later this month.

Bloomberg data shows Evergrande has some $7.4 billion of bonds maturing next year.

China Evergrande shares in Hong Kong are up over 2% in early trade after tanking as much as 14% yesterday.

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Evergrande has reportedly missed recent bond payments as the developer fights to fend off default

evergrande china
The Evergrande headquarters is seen in Shenzhen, southeastern China on September 14, 2021, as the Chinese property giant said it is facing “unprecedented difficulties” but denied rumours that it is about to go under.

Evergrande continues to wobble this week as bondholders said the imperiled property developer missed a key payment deadline, according to a Bloomberg report.

The report, citing people familiar with the matter, said that a Chinese company co-owned by Evergrande, called Jumbo Fortune Enterprises, had missed payment on a $260 million bond. The news pushed Evergrande’s bonds to new lows – now trading at less than a quarter on the dollar.

Specifics on the privately issued bond were hard to come by, but the episode signaled to markets that a partial default may be likelier than previously expected. Observers have for weeks wondered whether the Chinese government will intervene to prop up Evergrande, after it told the company to avoid a near-term default.

Reports of Evergrande’s missed payment came just days after the unexpected default of another property firm called Fantasia Holdings Group. Fantasia failed to repay a $206 million bond on Monday, prompting ratings firms to downgrade its debt to default status.

“We believe the existence of these bonds means that [Fantasia’s] liquidity situation could be tighter than we previously expected,” Fitch analysts wrote in a Monday note downgrading the company to CCC, or substantial credit risk.

Analysts are now eyeing other possible defaults in the Chinese property sector, which could portend a wave of failures or sweeping government intervention. For instance, another developer called Xinyuan Real Estate has a $229 million bond due on October 15, according to Bloomberg.

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Treasury yields spike to highest in over a year as investors weigh inflation concerns against recovery prospects

money
  • The 10-year yield zoomed past 1.5% on Thursday, reaching a level not seen since February 2020
  • The pace of the selloff in bonds has “increased severely” over the past few weeks, according to a fixed-income strategist.
  • The selloff comes as Congress is set to vote on a $1.9 trillion stimulus package 
  • Visit the Business section of Insider for more stories.

The yield on the US 10-year Treasury note surged to its highest in more than a year, with the rapid rise stoked by investors continuing to price in economic recovery expectations and related expectations for a pickup in inflation.

The 10-year yield hit as high as 1.545%, punching above 1.5% for the first time since February 21, 2020. The move came just a day after it pushed past 1.40%.

“It’s been a sharp selloff and what we’ve been talking about is how the pace of the selloff has increased severely over the last two or three weeks,” Scott Buchta, head of fixed income strategy at Brean Capital, told Insider on Thursday. Yields rise when bond prices fall.

“We’re probably going up into the 170s, 180s at this point,” in terms of the 10-year yield, he said.

Investors are seeing signs that the domestic and global economy are on course for growth this year after falling into recession in 2020 as the COVID-19 outbreak spread. This has fueled expectations for an increase in inflation.

The 10-year breakeven inflation rate, a gauge of the market’s inflation expectations, was at 2.17%. The breakeven rate is the difference in yield between 10-year Treasuries and 10-year Treasury Inflation-Protected Securities, or TIPS. That rate recently reached its highest level since 2014, according to Bloomberg data. 

One of the worries in the bond market is centered on the financial aid package that US lawmakers are expected to begin voting on during their session on Friday.

“How much stimulus can the market and the economy absorb?,” said Buchta. “There’s growing concern about the impact that additional supply could have on the market should Congress force through a $1.9 trillion stimulus package that may be too big for the economy and the markets to absorb.”

Read the original article on Business Insider

Treasury yields spike to highest in over a year as investors weight inflation concerns against recovery prospects

money
  • The 10-year yield zoomed past 1.5% on Thursday, reaching a level not seen since February 2020
  • The pace of the selloff in bonds has “increased severely” over the past few weeks, according to a fixed-income strategist.
  • The selloff comes as Congress is set to vote on a $1.9 trillion stimulus package 
  • Visit the Business section of Insider for more stories.

The yield on the US 10-year Treasury note surged to its highest in more than a year, with the rapid rise stoked by investors continuing to price in economic recovery expectations and related expectations for a pickup in inflation.

The 10-year yield hit as high as 1.545%, punching above 1.5% for the first time since February 21, 2020. The move came just a day after it pushed past 1.40%.

“It’s been a sharp selloff and what we’ve been talking about is how the pace of the selloff has increased severely over the last two or three weeks,” Scott Buchta, head of fixed income strategy at Brean Capital, told Insider on Thursday. Yields rise when bond prices fall.

“We’re probably going up into the 170s, 180s at this point,” in terms of the 10-year yield, he said.

Investors are seeing signs that the domestic and global economy are on course for growth this year after falling into recession in 2020 as the COVID-19 outbreak spread. This has fueled expectations for an increase in inflation.

The 10-year breakeven inflation rate, a gauge of the market’s inflation expectations, was at 2.17%. The breakeven rate is the difference in yield between 10-year Treasuries and 10-year Treasury Inflation-Protected Securities, or TIPS. That rate recently reached its highest level since 2014, according to Bloomberg data. 

One of the worries in the bond market is centered on the financial aid package that US lawmakers are expected to begin voting on during their session on Friday.

“How much stimulus can the market and the economy absorb?,” said Buchta. “There’s growing concern about the impact that additional supply could have on the market should Congress force through a $1.9 trillion stimulus package that may be too big for the economy and the markets to absorb.”

Read the original article on Business Insider