– Investor tremors at the collapse of real estate company China Evergrande continue. The shares fluctuated wildly back and forth on the Hong Kong stock exchange on Thursday and were recently around four percent lower. The group lets its bondholders from abroad fidget and apparently let the second deadline for a foreign bond pass within a few days.
The interest payments due on Wednesday for the dollar bond, which runs until March 2024, have not been made, said two creditors. In total, Evergrande would have had to pay $ 47.5 million for it. A company spokesman did not want to comment on this. It remained unclear whether the bondholders were told what Evergrande intends to do with the outstanding payments. “Regardless of how the debt is restructured, Evergrande shareholders and investors in offshore corporate bonds denominated in US dollars will suffer huge losses,” said Jing Sima, chief strategist for China at BCA Research.
Last week Evergrande let a similar payment deadline for $ 83.5 million pass without comment. The silence of the real estate giant, laden with more than $ 300 billion in debt, on its international payment obligations has raised suspicions that domestic and foreign creditors are being treated differently. The domestic sale of shares in Shengjing Bank for 9.99 billion yuan (around 1.3 billion euros) to a state-owned asset company serves only one of the largest domestic lenders, and Evergrande recently reached an agreement on a bond denominated in the local currency, yuan. “There is little evidence that there is a great willingness to treat foreign bondholders more equitably towards domestic bondholders, let alone homebuyers and people who have lent money through domestic personal loan structures,” said Alexander Aitken, a partner at Herbert Smith Freehills. From a legal point of view, however, there is also a subordination to offshore debts, which is why domestic creditors are likely to be more likely to be served.
Observers expect that the government in Beijing will prevent an uncontrolled collapse of the group, which could lead to social unrest. Some small investors stormed the company’s headquarters a few days ago and asked for their money back. Many expressed their anger at Evergrande on the WeChat messenger service, where protests were organized in special groups. On Wednesday, users said that the functionality of some groups was limited.