Evergrande said to meet the bond payment deadline

Evergrande ChinaThe troubled real estate giant repaid debts on at least two of its bonds on Wednesday, one of the company’s bondholders said, indicating that it may once again be able to avoid default.

Evergrande owes investors interest payments on three bonds, totaling about $150 billion, with grace periods for those payments to expire Wednesday. Losing it could lead to a default that could spill over into the Chinese economy: With about $300 billion in debt outstanding, the company’s inability to pay its debts is likely to hurt the country’s banks, property developers and even homebuyers.

Instead, the company was able to jump from one deadline to the next, fulfill its obligations At the last minute – but often without explaining how or even publicly revealing that she did it. The company tried to sell off parts of its empire to raise enough cash.

In October, when Evergrande said it canceled its efforts to sell $2.6 billion In its real estate services firm to another developer, the company warned in a Hong Kong securities filing that there was “no guarantee” it would be able to meet its financial obligations or negotiate an extension with its creditors.

The person, who spoke on condition of anonymity to discuss the matter, said the company on Wednesday met the deadline for paying interest on the bonds maturing in 2022 and 2023.

It was not immediately clear whether it had paid the third bond, which matures in 2024, or whether all investors in the other two bonds had received the payment.

The company did not respond to a request for comment.

Although Evergrande has managed to avoid default so far, its problems are already starting to affect other Chinese developers, with the government tightening controls on borrowing and investors pulling back from the sector.

At least six Chinese real estate developers have defaulted on foreign bonds in recent weeks, shaking domestic financial markets and raising the borrowing cost for all Chinese companies. Real estate prices are slowing down and fewer people are buying apartments, which is worsening the outlook for real estate.

Evergrande’s challenges can spread outside of China as well, as it spreads across the global financial markets. On Monday, the Federal Reserve said that problems in China’s real estate sector could threaten the United States.

“Given the size of China’s economy and financial system as well as its extensive trading links with the rest of the world, financial stresses in China can strain global financial markets by worsening risk sentiment, pose risks to global economic growth, and affect the United States,” the Fed said in a statement. It is updated twice a year on the US financial system.

Alexandra StephensonContribute to the preparation of reports.

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