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Tags: China | china | evergrande | debt | bonds

China's Largest Real Estate Developer Could Trigger Massive Default

China's Largest Real Estate Developer Could Trigger Massive Default
(Getty)

By    |   Saturday, 09 October 2021 01:26 PM

Offshore bondholders are concerned Evergrande, one of China's largest real estate developers, could run into default.

The news comes as Evergrande is wrestling with roughly $300 billion in debts and after it missed bond payments worth a combined total of $131 million during the dates of Sept. 23 and Sept. 29. Evergrande's silence on bond payments has left offshore investors wondering if significant losses loom on the horizon.

"We all feel that an imminent default on the offshore bonds is or will occur in a short period of time,"  Bert Grisel, a managing director at investment bank Moelis & Co. that is representing bondholders, said, according to FOX News.

"Unfortunately, so far," he adds, "we have had a couple of calls with the advisers," however, there has been no "meaningful dialogue with the company or provision of information."

Neil McDonald, who works with the law firm Kirkland & Ellis, said the bondholders are hoping for more transparency from the housing developer and that it will meet disclosure obligations under stock listing rules.

"Whilst we don't want to overstate this, we are obviously at this point in time preparing contingency plans to ensure that there are no dissipation of assets," McDonald stated.

"And if there is such activity, we will be prepared to take steps to protect the rights and interests of U.S. creditors, and we really hope that that's not necessary," McDonald added.

The problem of real estate developers defaulting doesn't seem to be localized to just Evergrande. Bondholders with China-based Greenland Holdings, which has built massive towers in London, Sydney, Los Angeles, and New York, saw their bonds take a nosedive on Friday.

"Market participants are questioning if this may be a precursor for voluntary defaults by other developers with healthy short-term liquidity positions, but large unsustainable longer-term debt," Chang Wei Liang noted, a Credit & FX Strategist at DBS Bank.

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Offshore bondholders are concerned Evergrande, one of China's largest real estate developers, could run into default.
china, evergrande, debt, bonds
312
2021-26-09
Saturday, 09 October 2021 01:26 PM
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