Belföldi hírek

Today, the grace period for overdue interest of $47.5 million on an off-shore bond issued by the second largest real estate developer in China ended. But there has been no official confirmation of any payment of that interest by the close of business at Hong Kong banks. There are only unconfirmed media reports about an interest payment that is said to have been instructed today. However, Evergrande has not officially confirmed this payment yet. No wonder, for example, that a recent report in the Financial Times today doubts that the money has actually paid to creditors. "This is basically the same game as a week ago," notes DMSA senior analyst Dr. Marco Metzler. Even for the overdue interest payment on October 23 in the volume of about $83 million, there is still no official confirmation from investors. "Even our inquiries to affected investors since then did not bring any confirmation for the interest receipt," explains DMSA senior analyst Dr. Marco Metzler. (Note to editors: See also our press release of 25.10.2021) "Thus, the bankruptcy has apparently already technically occurred," analyzes Metzler. The developer had already previously given no more information on whether it can still avoid a payment default. Efforts to raise further capital have also largely failed. For example, the plan to sell a majority stake in its real estate management subsidiary. Behind the scenes, negotiations were hectic until the very end. According to news agency Bloomberg, Evergrande representatives met with affected bond investors in New York at 4 p.m. local time on Oct. 28. In the talks, institutional creditors requested information on the status of real estate projects, liquidity and asset valuations, informed sources said. The meeting ended without an official result, but with a commitment to make interest payments. The result was published by the New York Times still yesterday and taken up by the media as if the payments had already been made. However, this is not the case so far. The developer defaulted on three coupon payment rounds in September and October totaling nearly $280 million. However, a 30-day grace period is still running in some cases. Between Nov. 1 and Dec. 28, a total of coupon payments on offshore bonds with an interest volume of nearly $338 million are now due. In Dr. Metzler's view, the Evergrande case also throws a spotlight on Beijing: "The Chinese state is clearly not interested in bailing out for the international debts of Chinese corporations." He says this is evidenced, for example, by the fact that China's financial market regulator summoned all property developers to a meeting this week and called on them to repay their international debts themselves. And that's where things come in: A study by rating agency Standard & Poor's dated Oct. 27, 2021, shows that China's real estate developers alone are due to redeem paper with a face value of $40 billion by the end of the year. According to a study by Goldman Sachs, the foreign debts of Chinese real estate developers total around 197 billion US dollars. "Given such volumes and the low creditworthiness of many Chinese real estate developers, it is to be expected that interest and redemption of the international bonds issued by Chinese real estate developers will almost completely default," warns Metzler. "Especially since there are hardly any possibilities to collect the debts in China." It is true that an agreement between Beijing and Hong Kong (Mutual recognition and assistance to insolvency proceedings) has been in place since May 14, 2021, which is intended to make it easier for foreign creditors to enforce their asset claims even in China itself when Hong Kong companies - like Evergrande - stumble. However, doubts are now growing as to whether this bilateral framework is sufficient to protect the claims of institutional foreign creditors in the case of Evergrande, whose holding company is incorporated in the Cayman Islands. (folyt.)