China Evergrande Group’s liquidity crisis deepens as the conglomerate struggles to stem its ‘bleeding’ debt ahead of Thursday when it is due to make two interest payments.
Gatekeepers News reports that Evergrande, one of China’s largest real estate developers, has been taking loans over the years that in turn resulted in its debts’ rise as the company finds it difficult to meet up with repayments.
Evergrande interest payments that are due on Thursday include $83.5m (€71.2m) of interest on an 8.25pc, five-year dollar bond, according to data compiled by Bloomberg. Also, Evergrande is due to pay a $36m (€30.7m) coupon on an onshore bond the same day.
The company which was founded by Chinese billionaire Xu Jiayin has $669 million in coupon payments that will be due at the end of this year.
Despite investments in electric vehicles, sports and theme parks, Evergrande also has bank interest loans to settle. Although details on the amount aren’t made public, but it was gathered that Chinese authorities have already informed major lenders not to expect repayment. The company and banks are in talks to see if there is a possibility to extend and roll over some loans.
Gatekeepers News gathered that Evergrande’s debt pile includes about 571.8bn yuan (€75.4bn) of borrowings from banks and other financial institutions such as trusts, with 240bn yuan (€31.6bn) due in less than one year.
As of June 30, the average borrowing cost stood at 9.02pc as a portion of Evergrande’s borrowings was secured by a pledge of its properties and equipment, land use rights, cash held at banks and the equity interests of certain subsidiaries.
Analysts have said the payments that are due on Thursday will be a key test of whether the developer will continue meeting obligations to bondholders even as it falls behind on payments to banks, suppliers and holders of onshore investment products.
