China Evergrande Shares Slide Over 16% as Payment Obligation Deadline Looms


By Gina Lee – China Evergrande Group (HK:3333) shares plunged over 16% on Monday. Losses at the developer continue to be heavy ahead of a fast-approaching deadline for payment obligations within the week, with investors not confident that the company can stump up the cash.

‘The company’s Hong Kong shares tumbled 16.93% to HK$2.11 ($0.27) by 12:39 AM ET (4:39 AM GMT). Shares in its property management unit, Evergrande Property Services Group (HK:6666), slid 12.61% to HK$4.02. HengTen Networks Group Ltd. (HK:0136), the movie streaming company majority-owned by Evergrande, saw its shares slump 13.79% to HK$2.

All eyes are on whether China Evergrande will be able to pay the $83.5 million interest for its March 2022 bond, due on Thursday. It has a second $47.5 million interest payment due on Sep. 29 for its March 2024 notes.

The bonds would default should the company fail to make the payments within 30 days.

China Evergrande has been struggling to raise the funds to pay its creditors, supplier and investors. Regulators have already warned that the company’s $305 billion in liabilities could spread broader risks to China’s financial system if it is not stabilized. However, the prospect of a direct government bailout is unlikely as authorities are telling major lenders to extend interest payments or rollover loans.

One main lender has already made provisions for losses on a portion of its loans to China Evergrande, while some creditors are planning to give it more time to repay, four bank executives told Reuters.

The company has also begun repaying investors in its wealth management products with real estate, the company said on Sunday.

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