Evergrande debt defaults 3 times Crisis spreads across mainland real estate industry

Evergrande Group defaulted on its debt for the third time and failed to fulfill another US$148 million in bond interest on Oct. 11. Its crisis spread throughout the mainland real estate industry, with a number of real estate companies such as Contemporary Land and Sony Holdings also postponing their debt repayment dates further.

Evergrande Group has missed the interest payment of two US dollar bonds in September, and the grace period will expire at the end of October with a total value of US$131 million. At the same time, the 260 million U.S. dollar bonds guaranteed by Evergrande also passed the grace period on the 8th, and there was no news of repayment in the market.

Evergrande Group once again failed to pay a debt interest due of USD 148 million on October 11, involving three USD bonds with maturity dates of April 2022, April 2023 and April 2024, requiring interest payments every six months.

At a time when Evergrande has defaulted on its debt three times, the real estate industry, such as Fancy, Contemporary Land and Synergy Holdings, is also experiencing a shortage of funds, adding to the debt risk. 11, Contemporary Land announced that the payment of the balance of US$200 million bonds due on October 25 was postponed, and it is now seeking investors’ understanding and agreement to forgive until January 25, 2023.

Fancy Year, founded by former Communist Party Vice Chairman Zeng Qinghong’s niece Zeng Bao, also recently defaulted on its debt, failing to repay $206 million in bonds on Oct. 4.

Reuters cited an analysis that said the default on Fazhanian’s U.S. dollar bonds is a further blow to mainland real estate companies in the face of Evergrande’s unresolved debt crisis, and that the default is the latest sign that China’s real estate sector is in trouble and has liquidity problems.

Economic Observer reports that 140 real estate dollar bonds have fallen by more than 20% in the past month; 44 real estate dollar bonds fell by more than 20% in the week from the 4th to the 9th due to the default of real estate company Fancy Year.

Some institutional investors believe that the recent intensive defaults of Chinese real estate companies’ credit bonds have caused investors to panic and sell, thus bringing down prices.

The report said that 2021 and the first half of 2022 is the peak of the dollar debt repayment period, coupled with the impact of official policy regulation, since the second half of the year real estate companies have become difficult to pay back, the risk and pressure of debt service is increasing.