China Evergrande’s Snowball Debt Crisis

China Evergrande’s Snowball Debt Crisis

HONG KONG, Dec 7 (Reuters) – Some holders of China Evergrande Group’s (3333.HK) offshore bond have not received coupon payments at the end of a 30-day grace period, four people said aware of the case. Cash-strapped property developer closer to formal default.

Failure to pay $82.5 million in interest due last month would trigger a cross-default on the company’s roughly $19 billion in international bonds and put the developer at risk of becoming the world’s biggest defaulter. history of China. Read more

Here is a timeline of events of how the Evergrande debt crisis unfolded:

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August 2020

Regulators are meeting with Evergrande and other developers to introduce caps for three leverage ratios in a scheme dubbed the “three red lines.”

Evergrande is selling a $3 billion stake in its property management unit ahead of the unit’s initial public offering (IPO). He is asking the Guangdong provincial government to approve a disguised listing from Shenzhen of the unit that has languished for four years, saying it could otherwise face a cash crunch.

September 2020

Evergrande is offering 30% off properties for a month to boost sales.

October 2020

Evergrande raises $555 million in a slimmed-down secondary share sale in Hong Kong.

November 2020

Evergrande ends Shenzhen backdoor listing plan. Some strategic investors agree not to require repayment.

Evergrande Property Services Group Ltd (6666.HK) Hong Kong IPO raises $1.8 billion.

January 2021

China Evergrande New Energy Vehicle Group Ltd (0708.HK) raises $3.4 billion by bringing in six new investors.

March 2021

Evergrande is selling a $2.10 billion stake in online real estate and auto market Fangchebao to 17 investors in a pre-IPO deal. It aims to hit its three debt-to-equity caps by the end of the year, list Fangchebao early the following year, and create multiple units.

June 2021

Evergrande announces that it will sell a $386 million stake in peer China Calxon Group Co Ltd (000918.SZ).

The promoter is arranging HK$13.6 billion ($1.74 billion) to repay a maturing bond and interest on the dollar bonds.

Evergrande hit a debt cap, reducing interest-bearing debt to about 570 billion yuan from 716.5 billion yuan ($89.47 billion from $112.47 billion) six months earlier.

July 2021

A court orders the freezing of a bank deposit of 132 million yuan held by Evergrande at the request of China Guangfa Bank Co Ltd (GDDVB.UL) on a loan granted to the promoter. Evergrande says the loan is not due until March and plans to take legal action.

Some Hong Kong banks are refusing to provide new loans to buyers of two of Evergrande’s unfinished residential projects.

August 2021

Evergrande agrees to sell stakes in internet unit HengTen Networks Group Ltd (0136.HK) worth HK$3.25 billion.

The Guangzhou Intermediate People’s Court is centralizing the lawsuits against Evergrande across the country, sources said.

Evergrande says it is in talks to sell stakes in Evergrande New Energy Vehicle and Evergrande Property Services.

State media is reporting that construction has been halted on two Evergrande projects in Kunming, one for late payments.

Hui Ka Yan steps down as chairman of flagship unit Hengda Real Estate Group.

China’s central bank and banking watchdog summon senior executives, issuing a rare warning that Evergrande must reduce its leverage risk and prioritize stability.

Evergrande warns of liquidity and default risks if it fails to resume construction, dispose of assets and renew loans, as it reports a 29% drop in net profit from one year to the next.

September 2021

President Hui promises buyers that Evergrande will complete construction of their homes.

He is asking for an extension of interest payments on trust loans to creditors, including CITIC Trust.

Hui is committed to reimbursing all mature Evergrande wealth management products as soon as possible. Investors crowd the lobby of Evergrande’s Shenzhen headquarters to demand repayment of the loans.

Evergrande says online speculation about bankruptcy and restructuring was “totally wrong” but acknowledges “unprecedented hardship”.

He says he has hired financial advisers to look at his options, warning of the risks of cross-default amid plummeting property sales.

Hui says helping retail investors redeem their investment products is a top priority.

Evergrande says it “resolved” a coupon payment on an onshore bond, but then misses payments on the September 23 and September 29 deadlines to pay coupons of $131 million.

Chinese Estates Holdings Ltd (0127.HK), Evergrande’s second largest shareholder, announces its intention to withdraw from its stake. The EV unit warns that it faces an uncertain future unless it receives a quick injection of cash.

Evergrande announces that it will raise 9.99 billion yuan by selling the shares of Shengjing Bank Co Ltd (2066.HK).

October 2021

Advisors to some holders of Evergrande’s dollar bonds – investment bank Moelis & Co and law firm Kirkland & Ellis – say they want more information and transparency.

Evergrande misses $148 million in coupon payments due Oct. 11.

Hong Kong’s audit regulator said it was investigating Evergrande’s 2020 accounts and PwC’s audit.

Reuters reports that state-owned Yuexiu Property Co Ltd (0123.HK) has pulled out of a proposed $1.7 billion deal to buy Evergrande’s Hong Kong headquarters.

Evergrande is paying an onshore bond coupon of 121.8 million yuan, sources said.

China’s vice premier, central bank, and banking and securities watchdogs are seeking to reassure markets that the ripple effects on the banking system and real estate sector from China’s debt woes Evergrande are controllable.

Evergrande is opting out of selling a $2.6 billion stake in the services unit to rival Hopson Development Holdings Ltd (0754.HK).

A defaulted private bond guaranteed by Evergrande, Jumbo Fortune Bond, secures an extension of more than three months, reports REDD.

Evergrande is paying out funds for a dollar bond coupon that was due to arrive Sept. 23 to avoid a default before the 30-day grace period expires, a source said.

November 2021

British e-mobility company Bedeo has announced that it has acquired Evergrande’s automotive unit Protean Electric.

Evergrande once again avoids a destabilizing default with a last-minute bond payment.

Evergrande said he was selling his entire stake in streaming service company HengTen for $274 million.

Evergrande’s electric vehicle division says the unit is raising about $347 million through a stock sale to fund the production of new-energy cars.

A government body is taking over Evergrande football stadium with a view to selling it, Reuters reports.

Chairman Hui sells 1.2 billion shares worth a total of HK$2.68 billion ($344 million), reducing his stake in the Shenzhen-based property company to 67.9% from 77 %.

December 2021

China’s Guangdong province has summoned Evergrande’s chairman after the developer said there was ‘no guarantee’ it would have enough funds to meet debt repayments, as regulators seek to reassure the markets.

Evergrande is setting up a risk management committee as it nears a debt restructuring.

($1 = HK$7.8006)

($1 = 6.3708 Chinese yuan renminbi)

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Reporting by Clare Jim; Editing by Sumeet Chatterjee and Christopher Cushing

Our standards: The Thomson Reuters Trust Principles.

Robert P. Matthews