Embattled Chinese property development company Evergrande Group must pay $83.53 million in coupon payments today.
The Shenzhen-based company is over $300 billion in debt and caused a major crisis when it threatened to default in mid-2021. Though the situation briefly stabilized as Evergrande’s creditors awaited a Chinese government-sponsored debt restructuring plan, it remains delicate.
Evergrande suspended trading in its shares and those of two subsidiaries Monday. Evergrande announced this morning that unnamed banks have seized $2 billion in cash. Simultaneously, it said that it would not meet the March 31 deadline for releasing its 2021 audit. Three other major developers have also delayed their 2021 audit deadlines, which bodes poorly for China’s economy.
Though Evergrande has received domestic bondholders’ approval to delay coupon payments, its international creditors have increasingly lost patience. This morning’s blows, combined with the domestic focus of the restructuring, will likely be the last straw for many.
Expect Evergrande to fail to meet today’s coupon payments. Subsequently, expect its international creditors to begin legal action over the debt restructuring process. They have little chance of success in China, but the case will discourage foreign investment by showing foreign creditors have little chance of recouping losses.
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Connor is a Content Editor and Analyst on the Daily Brief team and a member of the Communications team. His primary research focus is Latin America