China's Evergrande Group has defaulted on its third round of bond payments, and this will heighten market fears about contagion involving other property developers with a mountain of debt obligations due in the near term. .
According to Arab Net, some bondholders said they did not receive coupon payments totaling $148 million on the April 2022, April 2023 and April 2024 Evergrande bonds due today, after two more missed payments in September.
This situation puts investors at risk of significant losses at the end of the 30-day grace periods, as the Chinese developer is saddled with more than $300 billion in commitments.
Refinitiv data shows that a total of $101.2 billion in bonds issued by Chinese developers will be due next year.
“We see more defaults if the liquidity issue does not improve significantly,” CGS-CIMB brokerage said in a note, adding that developers with weaker credit ratings are having difficulty refinancing at the moment, Reuters reported.
High-yield bond trading remained subdued on Tuesday, after falling in the previous session on fears of contagion spreading quickly in the $5 trillion sector, which accounts for a quarter of China's economy, and is often a key factor in policymaking.
Shanghai Stock Exchange data showed that the top five losers among the stock exchange-traded bonds in the morning deals, those issued by real estate companies.
Small developers such as Modern Land and Sinic Holdings have been the latest to seek delays in deadlines, after Evergrande and Fantasia Holdings have defaulted on their payments since September.
