Investors holding US dollar bonds for heavily-indebted Chinese property developer China Evergrande Group hadn’t received an interest payment from the property giant by Thursday’s deadline, people familiar with the matter told The Wall Street Journal. Evergrande was required to make $83.5 million in coupon payments by September 23 on dollar bonds with a face value of $2.03 billion. The company can make the payments belatedly and it has a 30-day grace period before bondholders can call a default.
Having been warned to prepare for the worst by Beijing, several local governments in China have set up special custodian accounts for Evergrande’s property projects, to protect funds earmarked for housing projects from being diverted, reports Reuters.
The special accounts have been set up since late August in at least eight provinces where Evergrande has the most unfinished projects. The areas include Anhui, Guizhou, Henan, Jiangsu and cities in the southern Pearl River Delta and the custodian accounts aim to ensure homebuyers’ payments are used to complete Evergrande’s housing projects, and not diverted elsewhere, such as to creditors.
In a further blow to Evergrande, the Group has abandoned a plan to float its car-making unit in Shanghai. The carmaker, known as Evergrande New Energy Vehicle Group, will no longer proceed with its domestic share offering after “due and careful consideration,” according to an exchange filing late Sunday, reports the South China Morning Post. Its market value has plummeted by $84 billion from the peak in mid-April.