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China Evergrande shares fall after warning of possible dollar bond defaults

By Yongchang Chin

Shares of China Evergrande Group fell on Monday, following the real estate developer’s warning of the possibility of a cross default on its dollar bonds after it was ordered to repay $260 million in debt.

“Given the group’s current liquidity position, there is no guarantee that the Group will have sufficient funds to continue to meet its financial obligations,” Evergrande said in a statement late Friday. .

The 30-day grace period on $82 million on domestic and foreign voucher payments due on November 6 is also about to expire, according to the company, according to debt research firm CreditSights. CreditSights debt research.

The Hong Kong-listed developer has asked for help from the Chinese government, with the Guangdong provincial government sending a working group to help the company manage its risks.

Shares fell as much as 14% to HK$1.94, their lowest level since May 2010. The stock last fell 12% at HK$1.97 at the midday break.

CCB International Securities said the possibility of default was “not surprising”, adding that it expected relatively limited contagion risks given the currently aloof credit environment. “Most developers remain stable,” it said.

It added that companies such as Sunac China Holdings Ltd., Shimao Group Holdings Ltd., Agile Group Holdings Ltd. and KWG Group Holdings Ltd. could benefit as the industry’s “darkest time” passes amid easing credit conditions.

US bank Jefferies said it “seems very difficult to save Evergrande”. “Evergrande’s restructuring is an foregone conclusion, which is largely expected given current bond yields.”

Write to Yongchang Chin at yongchang.chin@wsj.com

Source link China Evergrande shares fall after warning of possible dollar bond defaults

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