What people are saying about China Evergrande Group
HONG KONG, Oct.22 (Reuters) – China Evergrande Group (3333.HK) transferred funds to a trust account on Thursday for a bond interest payment due Sept.23, a source told Reuters on Friday, days before a deadline that would have plunged the besieged developer into formal default. Read more
Shares of Evergrande, which is grappling with more than $ 300 billion in liabilities, rose 8% on Friday morning.
Here’s what people are saying about the world’s most indebted developer, whose fate could spill over into global markets.
CHUANYI ZHOU, CREDIT ANALYST AT LUCROR ANALYTICS, SINGAPORE
“It boosts investor confidence in Evergrande and other Chinese USD real estate bonds, especially in terms of willingness to pay. That said, Evergrande has more payments to come. We are waiting to see if the company is able to meet its obligations. . “
KENNY NG, ANALYST EVERBRIGHT SUN HUNG KAI, HONG KONG
“I think investors shouldn’t be too optimistic about this. After all, Evergrande will still have a lot of short-term debt to pay down in the future, and its fundamentals such as the sales situation have not seen any relief. Clear signs of improvement so far At the same time, the current price of Evergrande bonds still reflects the lack of confidence in the market for its future.
“Therefore, the rebound in the Evergrande share price may just be a short-term performance, and investors need to take a cautious stance.”
JACKSON CHAN, DEPUTY DIRECTOR OF FIXED INCOME RESEARCH AT BONDSUPERMART, HONG KONG
“This is hardly surprising news for us, as we can expect from Evergrande’s previous moves, including the extension of the three-month maturity of its Jumbo Fortune bond and a coupon redemption on its bond. onshore which was settled in cash Obviously they want to avoid a default on short-term obligations that could allow creditors to claim and liquidate their offshore and onshore assets.
“The company can pay off the remaining coupons on the last day of each bond’s grace period. But is this good news for bondholders? in the salvage value of the bonds if they end up defaulting. Therefore, at the moment, we do not see the market reacting very positively to this news. “
HONG HAO, BOCOM RESEARCH MANAGER, HONG KONG
“It’s no surprise that Evergrande made the payment within the grace period, but it’s one of the many hurdles it faces. There is a lot, a lot of debt that is owed. deal with Hopson to sell the real estate service company fell through, so they still have to find the money somehow.
“If you look at the ‘three red lines’ policy that was released last year, there are a number of developers that fall into the red zone, and those are the developers that are seeing issues right now. I think we are. will see more default events coming through. “
WEI LIANG CHANG, MACRO STRATEGISTE, DBS BANK, SINGAPORE
“In the short term, we believe that the interest repayment should give a boost to Chinese risk assets, including the yuan and Chinese equities. Evergrande’s default risks, while not dissipated, have probably been postponed for a while. “
CASTOR PANG, RESEARCH DIRECTOR AT CORE PACIFIC, HONG KONG
“The market is on ‘wait and see’ because Evergrande still has a big pile of debt with the next batch of default dates coming up. Its liquidity is so bad that it is doubtful that it will be able to repay any further debt.
“Her sale of the service unit failed and her September and October sales deteriorated further and further. She has very little cash. This repayment also does not improve sentiment in the sector, as the Companies in liquidity crunch will always be in trouble. The situation will not change unless the PBOC releases more credit. “
MOH SIONG SIM, CURRENCY ANALYST, BANK OF SINGAPORE
“There is still a lot of skepticism. Bond prices haven’t gone up much. This is a situation they will try to keep going until they can’t.
“What’s important is the real estate market because they have a lot of projects under construction and the worst-case scenario would be for them to break down and the projects to remain unfinished which creates spillover effects for the economy. They saved time. “
GARY NG, SENIOR ECONOMIST, NATIXIS, HONG KONG
“The fact that Evergrande is able to meet its obligation after the grace period on the offshore bond is positive at least in the short term as it shows some commitment from the company and relieves offshore bond investors.
“However, they still have a bunch of deadlines ahead before the end of March. To meet all the obligations and bond coupon payments, they still need cash, either from themselves or from offloading the assets. Even though Evergrande managed to redeem the coupon this time around, it is still quite difficult for them to meet all of their future obligations. “
TRAVIS LUNDY, QUIDDITY ADVISORS ANALYST, HONG KONG
“I guess that means they also plan to pay off the offshore bond coupons due by the 29th. There’s no point paying this one if you fully plan not to pay the next six days later. , but given the cash flow difficulties reported by the company, it’s unclear how long they can keep this.
“Given that we have little clarity on how bank financing is going for stalled real estate projects, but we know that project pre-sales are dropping sharply, onshore activity is unlikely to provide liquidity to Evergrande in the short term. And I expect Hopson’s clarified response yesterday to mean legal action if Evergrande tries to sell Evergrande Property Services to someone else. “
Reporting by Scott Murdoch, Alun John and Clare Jim in Hong Kong, Tom Westbrook and Anshuman Daga in Singapore; Compiled by Anne Marie Roantree; Editing by Christopher Cushing and William Mallard
Our Standards: Thomson Reuters Trust Principles.