Evergrande Misses Dollar Bond Interest Payment Again... China's Liquidity Crisis Spreads

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[Asia Economy Reporter Cho Hyun-ui] China Evergrande Group, which is rumored to be bankrupt, has once again failed to pay interest on its dollar bonds. The crisis, which started with Evergrande, is spreading to other Chinese real estate companies such as Modernland, Xinyuan Real Estate, and Xinli Holdings, raising concerns about a chain default (debt default).

According to Bloomberg on the 11th (local time), Evergrande Group failed to pay $148 million (about 177.4 billion KRW) in interest on three dollar corporate bonds due that day.

The interest was on three bonds: a 9.5% coupon bond maturing in 2022, a 10.0% coupon bond maturing in 2023, and a 10.5% coupon bond maturing in 2014.

However, even though the interest payment was not made that day, there is a 30-day grace period, so it is not officially considered a default.

Evergrande Group had already failed to pay interest on dollar bonds twice on the 23rd and 29th of last month. The grace period for these interest payments ends this month, but whether payment will be made remains uncertain.

As the possibility of Evergrande Group's default increases, the liquidity crisis is spreading to other real estate companies. With bond repayment deadlines approaching one after another, companies are struggling to avoid defaults.

Another Chinese real estate company, Modernland, requested creditors to postpone the interest payment on corporate bonds maturing on the 25th of this month by three months.

Xinyuan Real Estate proposed to pay only 5% of the principal on bonds maturing on the 15th and exchange the bonds for bonds maturing in 2023. In relation to this, Chinese credit rating agency Fitch downgraded Xinyuan Real Estate's credit rating from 'CCC' to 'C'.

The principal and interest on dollar bonds that Modernland and Xinyuan must pay amount to $1.35 billion (1.6186 trillion KRW) and $760 million (911.2 billion KRW), respectively.

Xinli Holdings also announced that it is unlikely to repay bonds worth $250 million (299.7 billion KRW).

Xinli Holdings, listed on the Hong Kong stock exchange, saw its stock price plunge 87% in one day on the 20th of last month amid liquidity concerns, and trading has been suspended since. Earlier, Standard & Poor's (S&P) downgraded Xinli Holdings' credit rating from 'CCC+' to 'CC'.

Bloomberg expressed concern, stating, "The Chinese government's tightening of real estate regulations is heightening uncertainty for real estate companies such as Evergrande and could lead to defaults across the real estate market."

This content was produced with the assistance of AI translation services.