Bond Market News

The Chinese government has hired accounting and legal experts to examine Evergrande’s finances of as per Bloomberg sources, hinting towards a possible restructuring of the developer. Sources say that the regulators dispatched a team last month from King & Wood Mallesons, a law firm whose specialties include restructuring besides additional financial advisors and accountants. With the developer struggling to honor commitments and payables, sources say that the Guangdong government has encouraged Evergrande’s major banks to set up a creditor committee which would allow them to take over major decisions like asset disposals, but the banks are reluctant without getting a clear nod from the regulators.

Principal Global Investors (PGI) analysts say it will be increasingly difficult for Evergrande to meet offshore obligations and hence will more likely prioritize alleviating demands of homebuyers and paying out onshore retail claims over institutional ones. Howe Chung Wan, head of Asia fixed income at PGI notes that the hiring of advisors by Evergrande less than two weeks before a USD coupon payment shows that expectations of a bond restructuring have increased. “This is especially so in the face of social pressure onshore of delayed redemption payments for wealth management products (WMP) and the government already asking banks and trust loans to hold back from pulling lines.” Credit React says that Evergrande may start negotiating offshore debt after disclosing slower-than-expected asset disposals and contracted sales.

Dollar bonds of Evergrande sank 5 to 8 cents on the dollar yesterday after seeing a rebound late last week, when the company promised to redeem WMPs at the earliest.

Credit React says that Evergrande may start negotiating offshore debt after disclosing slower-than-expected asset disposals and contracted sales. Separately, the developer’s Chairman Hui Ka Yan resigned as the only director of a company that owns a house on Hong Kong’s Peak, 10C Black Link as per Sing Tao Daily reports, citing data from the company registry. The valuation of the house is about HK$800mn ($103mn).