Evergrande Ultimately Fails to Pay Dollar Bond Interest Due on 6th... Effectively in Default

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Hyung-min] Evergrande (恒大·Ebeogeuraendeu), a Chinese real estate developer burdened with debt exceeding 360 trillion won and facing bankruptcy, has entered a de facto default state after failing to pay bond interest due by the 6th.

Bloomberg News and others reported on the 7th that "Evergrande failed to pay the dollar bond interest that was due by the 6th."

According to the report, Evergrande did not pay a total of $82.49 million (approximately 97.6 billion won) in interest on two dollar bonds by 4 p.m. New York time on the 6th.

Evergrande affiliate Jingcheng (景程·Scenery Journey) failed to pay interest on two dollar bonds by the original due date of the 6th of last month, and the grace period (30 days) also ended on the 6th.

If Evergrande fails to repay this bond interest, it will officially enter default proceedings, but Evergrande has not issued an official statement regarding this matter.

If an official default is declared, it could trigger a chain default of all dollar bonds totaling $19.236 billion (approximately 22.7 trillion won).

Instead of announcing its stance on the repayment of bond interest on the night of the 6th, Evergrande disclosed that it launched a Risk Resolution Committee involving external participants.

The Risk Resolution Committee consists of seven members: two Evergrande executives including Chairman Xu Jiayin, and five members dispatched from state-owned enterprises, asset management companies, securities firms, and law firms.

External organizations participating include Guangdong Province state-owned enterprise Weihai Holding Group, Guangzhou state-owned enterprise Weshou Group, China Xinda Asset Management, Guoxin Securities, and Beijing Zhonglun Law Firm.

The market expects that with the launch of the Risk Resolution Committee, debt and restructuring based on Evergrande’s default will begin in earnest.

Among these developments, Bloomberg reported on the 6th (local time), citing anonymous sources, that Evergrande plans to include all offshore debts, including all public bonds and private bonds, in what would be China’s largest debt restructuring.

However, Bloomberg noted that official debt restructuring procedures have not yet started and that the details of the plan are subject to change.