Chinese real estate company Evergrande (EGNY) -11.71% is feared to collapse. It has payments due both locally and overseas and investors are concerned. Now the main property unit of the company, Hengda Real Estate Group, was able to strike a deal over a payment due Thursday.
The firm has a domestic bond to pay worth $35.9 million, around £26.2 million. The deal will calm investors nerves as the spiralling debt crisis of Evergrande has many fearing for their investments. This deal does not mean the company is out of the water, however it should give them valuable time.
The next payment due for the real estate developer is also on Thursday, $38.5 million interest payment on an overseas bond. Evergrande should not be so lucky as to be able to strike a deal on this sum.
Hengda filed a statement with the Shenzhen Stock Exchange, saying it reached an agreement with holders of the onshore bond, during private negotiations. The filing did not clarify the interest the Evergrande Group will have to compensate on the postponed payment.
Additionally, the statement did not include any information on the offshore bond due on Thursday as well. A 30-day grace period has been put in place in agreements with investors, after that missed payments on the bond would become a default.
Globally, the firm’s struggles have been a shock, fears of a collapse of China’s largest real estate developer are palpable. Evergrande is having trouble to meet repayments on its debt of over $300 billion.
The company's stock price on the Hong Kong Stock Exchange has gone down since Tuesday.
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*BBC (22. September 2021). BBC: Evergrande: Crisis-hit firm strike China debt deal. Last viewed on 22.09.2021 on https://www.bbc.co.uk/news/business-58647212.
