Bonds drop as giant creditors have yet to be paid: Evergrande update

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(Bloomberg) – China Evergrande Group’s dollar bonds fell after people familiar with the matter said some creditors have yet to receive repayment of a note they say is guaranteed by the developer.

Evergrande’s 2022 bond fell 0.8 cents to 23.5 cents to the dollar, prices compiled by Bloomberg showed on Thursday. Failure to pay the principal of the obligation may constitute a default because the note does not have a grace period, although five business days would be allowed if the default was due to an administrative or technical error. The bond was issued for an initial amount of $ 260 million by Jumbo Fortune Enterprises.

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Fantasia Holdings Group Co.’s surprise default this week suggests the industry’s funding difficulties may be “more serious than expected,” Goldman Sachs Group Inc. analysts have warned. The missed payment has investors wondering if other developers are in similar positions, the analysts wrote in a note.

Chinese Estates Holdings Ltd. jumped 32% in Hong Kong after billionaire Lau family offered to privatize their investment firm. Chinese Estates has been a long-standing supporter of the China Evergrande group, but recently reduced its stake. Chinese Estates shares had been suspended since September 29.

Key developments:

Evergrande-linked Jumbo Fortune bondholders have yet to be paid Evergrande Backer Chinese domains to go private after plunge The deal threatens to strain the finances of the HopsonCST group, which sells 32.18 million shares of Evergrande vehicles

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CST notes a “substantial loss” on Evergrande Investments (5:39 a.m. NY)

CST expects a loss on investments in Evergrande Senior Bonds and Evergrande NEV Stocks in its interim results for the six-month period ended Sept. 30, according to the Hong Kong Stock Exchange file.

Mortgage Backed Securities Secure (2:53 p.m. HK)

China residential mortgage-backed securities rated by S&P Global Ratings will not be affected by the likely default of China Evergrande Group, the rating company said in a statement. The rated agreements are backed by existing homes and therefore face no construction risk, S&P said.

Evergrande Linked Jumbo Fortune Bondholders Still Due (2:53 PM HK)

The default on the Jumbo Fortune bond could be Evergrande’s first major failure on maturing bonds as regulators urged him to avoid default in the short term. The company is a joint venture whose owners include Hengda Real Estate Group, Evergrande’s main onshore unit. The details of the guarantees are not widely known because the prospectus of the notes is not publicly available and the agreement has not been listed on the stock exchange.

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Still no disclosure (1 p.m. HK)

Evergrande had not yet disclosed the details of its “major transaction” at 1 p.m. Thursday. That means the stock and that of its real estate services unit will remain on hold until at least Friday, under Hong Kong Stock Exchange rules. But trading stops in Hong Kong can last for weeks or even months, as there is no specific time limit set by the exchange.

Evergrande shares were last traded on September 30. Hopson Development Holdings Ltd. plans to acquire a 51% stake in Evergrande Property Services Group Ltd., Chinese media platform Cailian reported earlier this week, citing unidentified people.

Goldman Warns of Funding After Fantasia Default (11:30 a.m. HK)

Developer funding constraints could worsen and refinancing issues could become a larger issue heading into next year, Goldman analysts led by Kenneth Ho wrote. deal, writing earlier this month that the Chinese government is under pressure to deal with the credit crunch facing debt developers before January, when bond repayments are expected to rise.

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Citigroup estimates that 15 of the nation’s most stressed real estate developers will have $ 5.2 billion owed by the start of the year. Most of them are principal payments on dollar bonds rather than interest or coupons, which adds to the urgency. The total is more than double the amount owed in October, a month when businesses are already struggling to repay debt.

Chinese Domains, Evergrande Unit Increase (9:30 AM HK)

Chinese Estates shares reached HK $ 3.84 each, below the tender offer price of HK $ 4. The family of billionaire Joseph Lau – a longtime supporter of Evergrande – have offered to buy the 25% they don’t already own in Chinese Estates. The stock recently plunged to an 18-year low.

China Evergrande New Energy Vehicle Group Ltd., the volatile electric vehicle unit majority owned by Evergrande, rose 17% on Thursday. HengTen Networks Group Ltd., in which Evergrande has a 26.55% stake, added up to 11%.

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Purchase southbound from Evergrande (6 hrs HK)

Mainland-based investors bought shares of Chinese real estate companies in Hong Kong through exchange links, according to Bloomberg Intelligence, Evergrande and its real estate services unit surpassing entries before they were suspended. The southbound connection reopens Friday after a week’s vacation in China.

“Buying south may be motivated by the hunt for bargains and the hope that developer debt crises will be resolved in an orderly fashion,” Bloomberg Intelligence analyst Marvin Chen said. Chinese investors have bought more than 300 million shares of Evergrande and its real estate services arm.

Interest terms for Evergrande dollar bonds:

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