China Evergrande Bond Interest Payment Deadline Approaches as Industry 41st Ranked Xinli Defaults

Industry 41st Ranked Shinri Officially Defaults on Dollar Bonds
Evergrande Also Misses Dollar Bond Interest Payments Three Times... Grace Period Ends on 23rd

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kim Suhwan] Sinic, a major Chinese real estate developer, has officially defaulted on its dollar bonds. Amid the ongoing liquidity crisis of Evergrande, China's second-largest real estate company, concerns over a chain default in the Chinese real estate sector are growing.

According to Bloomberg on the 20th, Sinic, listed on the Hong Kong stock exchange, failed to pay interest by the dollar bond repayment deadline on the 18th, resulting in a default.

International credit rating agency Standard & Poor's (S&P) downgraded Sinic's credit rating from CC to 'Selective Default' the day before.

Sinic ranked 41st in the Chinese industry based on housing sales as of August. The company had already failed to repay yuan-denominated bonds issued domestically last month.

Following Fantasia, Sinic has been added to the list of defaulting companies amid the Evergrande crisis, further heightening concerns over a chain default in the liquidity-stricken Chinese real estate industry.

Bloomberg pointed out, "Government regulations on the real estate industry have made it difficult for developers to refinance, increasing the risk of a 'wave of defaults.'"

Meanwhile, with the interest payment deadline for Evergrande's bonds just three days away, concerns are rising over Evergrande's default risk.

Earlier, major foreign media reported on the 19th, citing multiple sources, that Evergrande Real Estate, Evergrande's housing construction subsidiary, paid 121.8 million yuan (approximately 22.5 billion KRW) in interest on yuan-denominated bonds issued in China as scheduled the previous day.

This is the first time in the past month that Evergrande has properly paid bond interest on both yuan and dollar bonds.

Evergrande failed to pay scheduled dollar bond interest on the 23rd and 29th of last month and the 11th of this month.

However, the market largely views that Evergrande only prioritized repaying domestic yuan bond interest, which does not have a grace period, and that the liquidity crisis remains unresolved.

[Image source=Reuters Yonhap News]

The South China Morning Post (SCMP) noted, "Questions remain about Evergrande's ability to repay the debt accumulated during years of aggressive expansion," adding, "Repayment of yuan-denominated debt has done little to reassure overseas dollar bondholders or major credit rating agencies."

The market is closely watching whether Evergrande can properly pay the dollar bond interest it failed to pay a month ago by the end of the grace period on the 23rd.

Evergrande failed to pay $83.5 million (approximately 98.3 billion KRW) in dollar bond interest to bondholders on the 23rd of last month.

If Evergrande does not pay the interest by the grace period deadline on the 23rd of this month, an official default will be declared.

Even if Evergrande pays this interest, the 30-day grace periods for the bonds it failed to pay on the 29th of last month and the 11th of this month will soon expire in succession.

Evergrande is trying to overcome the default crisis by selling key assets such as subsidiaries and real estate holdings.

Evergrande is pursuing a plan to sell a 51% stake in its property management subsidiary Evergrande Property Services to another real estate developer, Hopson Development, for about 40 billion Hong Kong dollars (approximately 6 trillion KRW).

Additionally, Evergrande is reportedly also considering selling its electric vehicle subsidiary Evergrande Auto and the Swedish car company National Electric Vehicle Sweden (NEVS), which Evergrande Auto acquired.

However, as uncertainties surrounding Evergrande grow, negotiations for asset sales are facing difficulties.

Foreign media reported that on the 15th, Chinese state-owned company Vanke Real Estate considered purchasing a building in Hong Kong from Evergrande for $1.7 billion (approximately 2 trillion KRW) but withdrew the offer due to concerns over Evergrande's financial condition.

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