Evergrande bond payments again sugar-coated by anonymous sources, but bankruptcy could come in “matter of days”
It’s a case of Déjà vu in the curious case of China Evergrande’s quest to meet a seemingly never-ending conga line of debt obligations.
The most significant Evergrande bond payments deadline yet – the expiration of a grace period at midnight Wednesday, November 10 (US EST) for three missed bond coupon payments worth a total of US$148.2 million – has just passed in unremarkable fashion.
Something that in itself is quite remarkable, given the potential ramifications.
The payments (originally due on October 11) still have not been confirmed in any offical capacity, however anonymous sources have told major financial news publications that payments have been made.
“Evergrande Group once again averted a destabilising default at the last minute, with a source on Thursday saying several bondholders had received overdue coupon payments,” reported Reuters.
While an earlier Bloomberg report quoted an anonymous spokesperson from settlements provider Clearstream and two anonymous investors.
“Customers of international clearing firm Clearstream received overdue interest payments on three dollar bonds issued by Evergrande, a spokesperson for Clearstream said. Two investors who hold two of the notes confirmed that they received the payments, asking not to be identified because they weren’t authorized to speak publicly,” Bloomberg said.
It’s all remarkably similar to what played out through the media at the eleventh hour as previous critical bond payment deadlines loomed.
This proliferation of the reliance on anonymous sources in the Evergrande saga was outlined in this Asia Markets article published earlier this week.
Metzler, DSMA on quest for transparency
Led by veteran German credit analyst, Dr Marco Metzler, DSMA (German Market Screen Agency) recently purchased Evergrande bonds, not to make money, but to test Metzler’s hunch that Evergrande is not meeting its debt obligations and the sources being cited by the financial press have been misleading journalists and global investors.
“We as DMSA have deliberately bought bonds from Evergrande, knowing full well that we are unlikely to get them back, in order to finally get transparency into this opaque news,” Metzler said today following reports that Evergrande had once again staved off default.
“It cannot be that the leading media keep receiving news from unknown alleged bondholders that payments have been made.”
So has DMSA seen any coupon payments yet on its bonds?
It says it has not.
“Although some mainstream media outlets such as Bloomberg LP and Reuters reported that Evergrande had made its bond payments in the last few minutes, DMSA, as a public bondholder, has not yet received any payments, resulting in Evergrande’s default,” said Metzler.
“Therefore, we will now take legal action against Evergrande and file for bankruptcy.”
DMSA has issued an official statement confirming the bankruptcy proceedings.
“China Evergrande Group today again defaulted on interest payments to international investors. DMSA itself is invested in these bonds and has not received any interest payments until today’s end of the grace period. Now DMSA is preparing bankruptcy proceedings against Evergrande and calls on all bond investors to join it,” said DMSA.
Metzler claims Evergrande will be officially bankrupt “as soon as a court opens insolvency proceedings” and that is likely to be in a “matter of days”.
Evergrande offshore bond coupon payments to end of 2021
|Date||Coupon Payment Amount (USD)||Bond Maturity date|
|October 11, 2021||$68.9m||April 2022|
|October 11, 2021||$42.5m||April 2023|
|October 11, 2021||$36.8m||April 2024|
|October 24, 2021||$115m||October 2022|
|October 24, 2021||$120m||October 2023|
|November 6, 2021||$41.9m||November 2022|
|November 6, 2021||$40.6m||November 2023|
|December 28, 2021||$50.4m||June 2023|
|December 28, 2021||$204.8m||June 2025|