Evergrande will pay its next coupon and China believes the crisis is under control
The promoter China Evergrande Group has reported this Friday that next Tuesday it will pay the coupon provided for its bond with a maturity of five years and with an interest of 5.8%, this being the second maturity that it decides to pay since its liquidity problems began.
In a statement sent to the Shenzhen Stock Exchange, the Chinese real estate group has indicated that it will pay the coupon owed to investors without any conditions. When they reported the payment of the previous bond in September, they specified that they had reached an agreement with investors, without giving details about what that meant.
As happened then, Evergrande has decided to pay the coupon due to another of its yuan-denominated bonds, which are mainly aimed at Chinese investors. In recent weeks, international bonds denominated in dollars have matured without Evergrande communicating anything about whether it would pay them or not.
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The Chinese real estate developer has a liability of 1,966 trillion yuan ($305,774 million) as of June 30, 2021, the date of the latest available data. Of that figure, 571,775 million ($88,928 million) were loans and 951,133 million ($147,930 million) were accounts payable to suppliers.
This Friday, the People’s Bank of China explained that the potential risks for the Chinese financial system derived from the difficulties faced by the Evergrande group are “controllable”, according to statements by the head of Financial Markets of the institution, Zou Lan, collected by the agency ‘Bloomberg‘.
In this regard, the Chinese official has indicated that the authorities and local governments are solving the situation on the basis of “market-oriented principles and the rule of law”, adding that the central bank has asked lenders to maintain a flow of “stable and orderly” credit to the real estate sector.
At the end of last August, the Chinese group recognized the risk of incurring non-payment due to the difficulties in obtaining the necessary liquidity due to the suspension of work on several of the projects developed by the company.