Once again, Evergrande managed to avert a potentially destabilizing default.
Despite reports to the contrary, holders received overdue interest on three dollar bonds as the 30-day grace period expired on Wednesday, according to Clearstream.
Around the same time social media lit up with default innuendo, The New York Times said payments were made on at least two of the bonds. Subsequently, Bloomberg said payments were made on all three.
It marked the third time Evergrande dodged death over the past several weeks. The green bars in the figure (below) denote payments made as 30-day grace periods expired on missed coupons.
As the Times put it, “the company has managed to leap from one deadline to the next, meeting its obligations at the last minute — but often without explaining how or even publicly disclosing that it had done so.”
Late last month, with questions swirling around how Evergrande could possibly keep making payments after failing to sell assets, Beijing suggested founder Hui Ka Yan should help pay the company’s debt out of his personal wealth, which fell by around two thirds in 2021.
“The near-term fix seems to be happening but there’s a long way to go before this issue gets sorted out,” one source told Reuters Thursday. “These are early days.”
Seemingly none of the individual bondholders who spoke to the media were willing to be named.
News of the latest payments came as Chinese media worked to allay concerns and perpetuate the idea that although Beijing isn’t likely to abandon property curbs, it will adopt measures to stabilize the situation and otherwise avert a panic. “The fuse that triggers the collapse of an enterprise is often the perception caused by negative market sentiment,” the Securities Times said, noting that expectations are “an important prerequisite” to stability.
On Wednesday, local shares reversed declines when the Securities Times, in a front-page story, said the government could ease controls on issuance by domestic real estate firms, which will get “blood transfusions” via bond investments by banks and other institutional lenders, while Cailian said some SOEs implored Beijing to allow more M&A in the property sector.
Relatedly, the Wall Street Journal suggested Chinese regulators are “wary of financial risks spreading as a result of their crackdown on property lending,” leading Beijing to consider “easing the rules to let struggling developers sell off assets to avoid defaults.” Currently, Beijing’s limits on borrowing “are so strict that they have hurt the ability of developers like Evergrande to sell assets to repay debts,” the linked piece said.
In addition to the state media blitz — which included prominent commentaries in The China Securities Journal and Shanghai Securities News — the PBoC disclosed monthly mortgage data. Typically, the figures are only disclosed quarterly.
All of this comes as Xi seeks to ensure he can dominate the Party until his death.
On Thursday, The Central Committee called on “the entire Party, the military and all Chinese people to rally more closely around the Central Committee with Comrade Xi at its core, to fully implement Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and to champion the great founding spirit of the Party.”
The communique, published by Xinhua, marked the first time in four decades that a Chinese leader delivered a doctrine on Party history. Mao Zedong Thought, the communique said, “has been proven correct through practice.”
Also seen on Xinhua’s front page Thursday, an article called, “‘Political cancer’ is eating away at US democracy.”
Well, I wouldn’t disagree with the headline on political cancer in the US, everything else sounds like propaganda though. I guess this publication would be like Fox News complaining about propaganda in a foreign nation.
perhaps propaganda cancer serves as a tie between the China and US at present