Evergrande makes a payment and avoids a default

Posted on Oct 22, 2021 6:54 AMUpdated Oct 22, 2021, 9:09 AM

On the wire. The ultra-indebted Chinese promoter Evergrande has just avoided, this Friday and at the last minute, the suspension of payments. He has indeed paid interest on a bond, a day before the deadline, said a state media on Friday.

This news has been well received by investors. After losing more than 12% on Thursday for the resumption of its listing on the Hong Kong Stock Exchange, the title of the group returned to the green on Friday. By midday local time, it was gaining nearly 4.3%, in a market up about 1.5%.

A transfer of nearly 72 million euros

At the origin of this rebound, information published by the “Securities Times”. Citing “concerned sources”, the Chinese daily indicates that the promoter has indeed made a transfer of 83.5 million dollars (71.8 million euros) to honor a payment of interest on bonds in dollars. This, before the expiration of a grace period which was set for this Saturday.

While the short-term horizon has therefore become clearer, in the longer term, the risk of a possible bankruptcy – which could shake the country’s economy and by extension the world economy of which it is one of the engines – remains. Because the real estate group, which drags a slate of around 260 billion euros, conceded this week that it had not made significant progress in its efforts to bail out by selling some of its assets. And he’s still struggling to meet his interest payments and apartment deliveries.

The Chinese central bank considered the promoter’s situation delicate. But assured that the risk of contagion to the financial system was “manageable”.

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