China Evergrande Shares Hit New Low Amid Debt Crisis

By Reuters
December 8, 2021 Updated: December 9, 2021

HONG KONG—China Evergrande Group’s shares hit a record low on Wednesday after a missed debt payment deadline put the developer at risk of becoming the country’s biggest defaulter.

Failure by Evergrande to make $82.5 million in interest payments due Nov. 6 on some U.S. dollar bonds would trigger cross-default on its roughly $19 billion of international bonds, with possible ramifications on China’s economy and beyond.

While the 30-day grace period is over, Evergrande has not announced if the bonds have formally defaulted.

The developer did not immediately respond to a Reuters request for comment.

“Without the official announcement, the market will want to wait and see and not give up yet; otherwise Evergrande’s share and bond prices should have tumbled a lot more,” said Steven Leung, director of UOB Kay Hian in Hong Kong.

“The market also wants to wait and see what can be done with local government stepping in now,” Leung added, referring to the move by Evergrande’s home province to help contain the risk.

Evergrande was once China’s top property developer, with more than 1,300 real estate projects. With $300 billion of liabilities, it is now at the heart of a property crisis in China this year that has crushed almost a dozen smaller firms.

Trading in shares of embattled smaller peer Kaisa Group Holdings was suspended on Wednesday.

Shares Hit Record Low

Evergrande’s shares, which have given up more than 20 percent this month, were down 6 percent in the afternoon at HK$1.72—lowest since their November 2009 debut. The broader market was steady.

Its notes due last month, one of two tranches with a coupon payment deadline that passed on Monday, traded at 18.613 cents on the dollar, Duration Finance data showed, versus 18.875 from the close of Tuesday Asia hours.

Kaisa’s bond due April 2022 traded at 36.397, little changed from the day earlier but down from 37.89 last week.

The provincial government of Guandong, where Evergrande is based, stepped in last week to help manage the fallout.