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China Evergrande Shares Climb as Investor Jitters Soothed For Now

Stock MarketsSep 23, 2021 01:01AM ET
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By Gina Lee

Investing.com – China Evergrande Group (HK:3333) shares were back on an upward trend, with the heavily indebted property developer reaching an agreement to settle interest payments on a domestic bond was reached on Wednesday.

The company’s Hong Kong shares jumped 10.57% to HK$2.51 ($0.32) by 12:58 AM ET (4:58 AM GMT). They surged more than 32% earlier in the session, the most in more than a decade.

China Evergrande’s main unit, Hengda Real Estate Group, said on Wednesday it had "resolved" one coupon payment due on Thursday on its Shenzhen-traded 5.8% September 2025 bond, via "private negotiations".

The People’s Bank of China also injected a reported CNY90 billion ($13.91 billion) to CNY110 billion into the banking system in a move to assure investors.

However, Hengda did not specify how much interest would be paid or when. It also made no mention of China Evergrande's other liabilities, and it remains unclear whether the company will be able to pay its $83.5 million in dollar bond interest due on Thursday.

Some investors remained cautious, as a further $47.5 million dollar-bond interest payment comes due in the following week.

"We do not have a clearer picture as to how China Evergrande settled its onshore coupon. It doesn't look like a cash payment. It may still miss the coupon on offshore bonds," Lucror Analytics credit analyst Chuanyi Zhou warned.

However, other investors were more optimistic that any fallout is likely to be limited.

"Despite the worry, so far this looks like a corporate bankruptcy and not something worse. It’s a big one, to be sure, but one that can be handled within the system," Commonwealth Financial Network chief investment officer Brad McMillan said in a note.

China Evergrande Shares Climb as Investor Jitters Soothed For Now
 

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