Evergrande default concerns push Asian junk bond yields to 10-year highs

Evergrande paid three interest rates to international bondholders on Tuesday as high-risk Chinese corporate bond yields traded high for nearly a decade due to concerns that domestic developer growth is facing defaults. I missed the deadline.

The world’s most beloved developers were planning to pay a total of $ 148 million in dollar-denominated bonds on Monday, but bondholders are still funding, according to two people familiar with the matter. I have not received. The bond was last traded in dollars at 21-22 cents.

Evergrande Originally missed Significant $ 83.5 million interest payments at the end of last month on bonds due next year. The missed payment resulted in a 30-day grace period before the company officially defaulted. We are currently missing at least five bond interest payments.

The development of the developer liquidity crisis is a view on the health of China’s entire real estate sector as sales are sluggish, Beijing urges developers to cut debt, and many of Evergrande’s peers are approaching default. Caused.

Asian High yield bond marketIs one of the largest issuers of Chinese developers following decades of rapid urbanization in the country, and has been caught up in recent panic transactions, resulting in significant yields.

Since Friday, the yield on the ICE index, which tracks Chinese corporate issuers in the Asian dollar high-yield market, has skyrocketed to 22%. This is the highest since 2009, compared to just 13% in early September and 10% in June.

Chinese developer Sinic Holdings said Monday night that bond defaults, which mature this month, are “likely” because the company didn’t have enough “financial resources.” Bonds trade for about $ 1 for about 25 cents.

Luxury developer Fantasia, founded last week by the niece of former Vice President Zeng Qinghong of China, Default With a $ 206 million bond.

China’s 5-year government bond credit default swaps have risen 8 basis points so far this week to 59bp, the highest level since April 2020. Analysts suggest the move is related to the sale of real estate.

Charles MacGregor, Asia Head of Lucror Analytics, said: He added that China’s high-yield bonds are “under extreme pressure due to a shortage of buyers.”

Another developer, China Modern Land, on Monday Try to extend $ 250 Million Notebook Maturity by 3 Months Sunac China Holdings Over the last few weeks, there has been close scrutiny over a draft letter to local governments warning of a “turning point” in the real estate industry.

Feelings about Evergrande securities worsened significantly in July after a series of incidents, including: frozen One of the deposits at mainland banks and the suspension of sales of some projects.

In late August, a developer who carried out nearly 800 projects in hundreds of cities in China and was pressured by the government to cut debt for a year warned: Default risk..

Bond sales quickly spread to other highly leveraged developers, such as Fantasia and Guangzhou R & F, where bonds have fallen sharply recently.

Market volatility is a concern about the ability of developers to refinance, Slow sales Of new homes and land throughout China’s real estate sector, which accounts for about a quarter of China’s economy.

Evergrande’s international bondholders have hired investment bank Moelis and law firm Kirkland & Ellis to provide advice ahead of what is expected to become one of China. Largest debt restructuring ever process.

The adviser told bondholders that they had received it on Friday evening There is no “meaningful engagement” The company expected the default to be “imminent”.

Trading of Evergrande shares has been suspended in Hong Kong, as well as shares in the real estate services sector, which pointed out a possible takeover offer last week.

Evergrande default concerns push Asian junk bond yields to 10-year highs

Source link Evergrande default concerns push Asian junk bond yields to 10-year highs

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