Bonds of troubled property developer China Evergrande rallied on Thursday after news that some creditors had agreed to extensions on loan payments, reports Reuters. According to a Reuters source, Evergrande has requested an extension for at least three months on a trust loan interest payment to CITIC Trust, one of its major trust creditors, which was due in late August, citing tight liquidity.
CITIC has agreed to the extension, the source with direct knowledge of the matter said. The source added that similar delayed interest payments have been seen across the trust sector. CITIC dispatched a small team to Shenzhen, where Evergrande is based, last week, but it is not optimistic that Evergrande’s liquidity will improve soon, the source added, citing difficulties in finding buyers for its assets and the country’s strict mortgage policies.
News of the extensions came after a report on Wednesday said Evergrande would suspend interest payments due on loans to two banks later this month, as well as payments to its wealth management products. That report triggered steep falls in the company’s onshore bonds and shares on Thursday.