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Bond Market News

Evergrande’s Bonds Rebound as Loan Extensions Agreed Upon

Dollar bonds of China Evergrande rebounded up to 3 points as the regulator, China’s Financial Stability and Development Committee signed off on its proposal to renegotiate payment deadlines with banks and other creditors. The move is a temporary reprieve to the indebted developer that has been facing financial troubles in recent months.

CITIC has agreed to the extension of at least three months on a trust loan (Term of the Day, explained below) interest payment by Evergrande to CITIC Trust. The news of loan extensions comes after a report earlier this week that Evergrande would suspend interest payments due on loans to two banks later this month, as well as payments to its wealth management products. Gary Zhou, head of investments at Donxing Securities says that the Chinese government will not step aside and watch Evergrande fail. Jeffries analyst Shujin Chen says, “July was actually the worst time for Evergrande… Starting from August, regulators stepped in”, adding that over the past month, Evergrande has had “more positives rather than negatives.”

Evergrande’s 8.25% 2022s were up 3.3 to 30 cents on the dollar and its 8.75% 2025s were up 2.1 to 26.9 cents on the dollar.

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