Can they buy back their Bonds?
"The Evergrande Group or the Evergrande Real Estate Group is the second-largest property developer in China by sales. It is ranked 122nd on the Fortune Global 500. It is incorporated in the Cayman Islands and headquartered in the Houhai Financial Center in Nanshan District, Shenzhen, Guangdong Province, China" (Wikipedia) And, now this incredible company is the most indebted Real Estate developer in the world even.
As a leading Real Estate company, is affecting directly by social conditions and also vice-versa, can affect the social economy as well. After the global crisis caused by Covid-19, Evergrande problems also started, back in 2020, and since then, their debt and ability to pay back its bonds yields and even to buy them back was a big question and challenge for the company management. And considering the company size and importance of this industry, it can affect not just the Chinese economy, even can spill over into the prospects for the global economy.
Now they are in the worst possible situation. Their investors` trust suddenly grows skittish. Even if they do all their professional jobs perfectly, but the market’s fear of a bond default can put them out of liquidity and new investors for their next projects, even though if they can solve current problems.
The latest situation of the company is announced in a statement. In this statement, the company officials claim that "deep discounts offered at its May 31 sales event were rare, that it will arrange payments for its “very few” overdue commercial papers, and that a controversial business with a Chinese bank is in line with the law. The company said all its operations are normal and, in the last 25 years, it has paid all its dues on time. Evergrande’s $4.7 billion 8.75% dollar bond due 2025 has fallen to 72 cents on the dollar from 84 cents since May 28."
Last week, negative and positive news from Evergrande moved the market in opposite directions. For the week ahead also still have to follow the news and markets sentiment about this.
In the end, have to mention that it still has around $670 million in outstanding interest payments that need to pay this year, which is not clear if they can make it. And we should not forget that most of these payments are denominated in US dollars, which also complicates Evergrande`s ability to clean its debts.
