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China Property Bonds Firm After Kaisa, Sunac Make Payments

The bond market has responded positively to comments from China’s central bank saying the spillover effects from Evergrande’s debt woes on the banking system were controllable


The liquidity crisis at Evergrande, China's No. 2 developer, which has $300 billion in debt and has missed a series in bond payments, has roiled global markets. Photo: Reuters

 

Chinese property bonds remained firm on Tuesday after two major developers made coupon payments, though the market remained focused on the potential for default by China Evergrande Group this week.

The bond market has responded positively to comments from China’s central bank on Friday and Sunday saying that spillover effects from Evergrande’s debt problems on the banking system were controllable and that China’s economy was “doing well”.

Sunac China, which has a $27.14 million payment due on Tuesday, has paid its bondholders, a source with direct knowledge of the matter said.

The source was not authorised to speak to media and declined to be identified. A Sunac representative did not immediately respond to request for comment.

Kaisa Group said on Monday it has paid a coupon due October 16 and it plans to transfer funds for a coupon worth $35.85 million due October 22 on Thursday.

The liquidity crisis at Evergrande, China’s No. 2 developer, which has $300 billion in debt and has missed a series in bond payments, has roiled global markets. High-yield bonds issued by Chinese property developers have been especially hammered.

An Evergrande bond due March 23, 2022, will officially be in default if the company does not make good after a 30-day grace period for a missed coupon payment that had been due on September 23.

Bonds from Chinese developers that gained on Tuesday included Modern Land’s 2022 bonds which bounced over 8% to 40.250 cents on the dollar, while Central China Real Estate’s 2024 bonds climbed over 5% to 44.843 cents.

On Monday, smaller developer Sinic Holdings defaulted on $246 million in bonds as expected. It had warned of the default last week, saying it did not have sufficient financial resources.

 

  • Reuters with additional editing by Jim Pollard

 

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Evergrande Fallout ’Controllable’ Says China Central Bank

 

 

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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