Evergrande bondholder: “I will never see my money again”

As China Evergrande reportedly begins negotiating creative ways to repay billions owed to offshore bondholders, a paying agent of one of the embattled property giant’s USD-denominated bonds has sent a letter to investors officially confirming default.

Dr Marco Meltzer, a respected German financial analysts and outspoken critic of the handling of Evergrande’s debt crisis, says he received a letter from Citi earlier this week all but confirming the company is broke.

Citigroup serves as a paying agent for a number of Evergrande’s offshore bonds. Paying agents are intermediaries which accept payments from bond issuers and distribute the funds among the bond holders.

“Just this week, I received an official letter from the agent Citibank that Evergrande has defaulted on our bond and I will never see my money again,” said Dr Meltzer.

“As you know, I had bought bonds last year in November to see if the media coverage of the real estate giant was accurate, as they repeatedly reported that Evergrande was doing well.

“Unfortunately, it appears this media coverage is taking its course.”

Meltzer shared a copy of the letter (published in the feature image of this article) which states Evergrande and its Subsidiaries “have not made payment of interest that was due and payable on April 11, 2022”.

Last year, an Asia Markets’ investigation highlighted a litany of examples in which missed Evergrande offshore bond payments were sugar-coated in the financial press through anonymous sources claiming that default had been avoided, thus leading to many investors overlooking the risk the crisis poses to global financial markets.

Evergrande bondholders
 Through 2021, a series of media reports citing anonymous sources which claim that China Evergrande has met deadlines for bond coupon payments.

Anonymous sources claim Evergrande is working with offshore creditors

Flying in the face of Dr Meltzer’s letter from Citi has been yet another case of anonymous sources claiming Evergrande is in the process of negotiating ways to repay some $19 billion owned to offshore bondholders.

A Reuters article cited two unnamed sources who stated Evergrande is negotiating to repay its offshore debt in instalments over seven to 10 year periods and is also offering debt-for-equity swaps involving its Hong Kong-listed property services and electric vehicle subsidiaries.

But Dr Meltzer is again skeptical.

“How is that supposed to be possible, please, when now even the agent Citibank says they are broke?” he said.

“Unfortunately, I’m afraid that’s anything but better, as shares in Evergrande Property Services and Evergrande New Energy Vehicle, as well as the parent company, have been suspended for about two months.

“None of the companies have reported their 2021 financial results yet, as audit work is still ongoing. The property management unit has even been under internal investigation since March as well to find out how banks seized its 13.4 billion yuan in deposits pledged as collateral for third-party guarantees.”

Fitch ceases all ratings on Evergrande and Hengda and Tianji Subsidiaries

Earlier this week, China Evergrande’s deepening debt crisis was underscored when credit ratings giant, Fitch, withdrew ratings on Evergrande and two of its subsidiaries.

“Fitch has withdrawn the ratings as Evergrande and its subsidiaries have chosen to stop participating in the rating process,” Fitch said in a statement.

“Fitch will no longer have sufficient information to maintain the ratings. Accordingly, Fitch will no longer provide ratings or analytical coverage for Evergrande and its subsidiaries.”

Related: Dire Evergrande warning amid fears of ‘brutal’ collapse