camila October 4, 2021

HONG KONG (REUTERS, BLOOMBERG) – Trading in shares of China Evergrande Group was suspended on Monday (Oct 4) after the debt-laden company missed a key bond interest payment last week, its second offshore debt obligation in a week, with market watchers jittery as the group’s troubles unravel.

Shares of its unit, Evergrande Property Services Group, were also suspended, according to the Hong Kong Stock Exchange.

With its liabilities equal to 2 per cent of China’s gross domestic product, Evergrande has sparked concerns that its woes could spread through the financial system and reverberate around the world, though worries have eased somewhat after the central bank vowed to protect home buyers’ interests.

No reason was given for the halts Monday, with shares of another unit, China Evergrande New Energy Vehicle Group, still trading in Hong Kong.

People familiar with the matter have said that a dollar note maturing Sunday (Oct 3) issued at an initial amount of US$260 million by an entity called Jumbo Fortune Enterprises is guaranteed by Evergrande, according to Bloomberg.

As the maturity is a Sunday, the effective due date is Monday. The issuer is a joint venture whose owners include Hengda Real Estate, Evergrande’s main onshore unit. 

Non-payment of the bond principal would constitute a default as the note has no grace period, although five business days would be allowed if failure to pay is down to administrative and technical error, according to the people.

Details of the guarantees weren’t broadly known as the note prospectus isn’t publicly available and the deal wasn’t listed on exchanges. Monday is a holiday in China.