Evergrande Shares Plunge After Possible Dollar Bond Default Warning
The property developer warned of possible cross-defaults on its dollar bonds after being requested to settle a US$260 million debt commitment.
“In light of the current liquidity status of the group, there is no guarantee that the Group will have sufficient funds to continue to perform its financial obligations,” Evergrande warned late Friday.
CreditSights reports that the 30-day grace period for US$82 million in onshore and offshore bond coupon payments due Nov. 6 has expired.
The Chinese government responded by dispatching a working team to help the Hong Kong-listed developer manage its risks.
The stock dropped 14% to HK$1.94, its lowest since May 2010. By lunchtime, shares were down 13% at HK$1.97.
As a result of the current loosening lending climate, CCB International Securities sees modest contagion concerns. “Most developers remain stable,” it claimed.
“darkest moment” of the sector is over and loan conditions are loosening.
“China appears unlikely to bail out Evergrande,” said Jefferies. “Evergrande’s restructuring is a foregone conclusion, which is largely expected given current bond yield.”