Chinese developer Evergrande is behind on payments on dollar bonds

Chinese developer giant Evergrande has defaulted on payments on dollar bonds - if the company does not fulfill its obligations for more than $ 80 million within 30 days, the debt will be defaulted, writes Reuters .

The deadline for paying $83.5 million in interest on the company's dollar bonds passed on Thursday. Evergrande did not make any official announcements, and bondholders did not receive any coupon payments. Evergrande remains silent on other $47.5 million in interest due next week. The company's attitude towards foreign-currency papers contrasts with its actions towards domestic investors, the agency notes: this week the company promised that it would pay $35.9 million on bonds in yuan. “Beijing believes that foreign currency bond holders are mostly Western institutions and therefore can rightly be treated differently,” Carl Clory, partner at Addleshaw Goddard in London, told Reuters.

Evergrande has 30 days to pay coupons on dollar bonds, otherwise the debt will default. At the same time, such a combination of events is not at all necessary, writes Bloomberg: Chinese companies have repeatedly used this grace period to transfer interest in the past, including transferring money on the last day. There may be an option to extend the payment of funds: in December 2019, bondholders for $ 310 million from the Peking University Founder Group agreed to a two-month extension of the maturity of the papers. Bloomberg at the same time specifies that in the end the company did not pay the coupon even by this date.

• The lack of bond payments fuels investor fears that Beijing will allow the company to collapse and huge losses for foreign investors, Reuters notes. The developer's shares fell 11.6% on Friday after news of late payments.
• Now the total debt of Evergrande exceeds $300 billion. Markets fear that the collapse of the Chinese developer carries systemic risks for the Chinese economy (Evergrande's debt corresponds to 2% of China's GDP) and may negatively affect foreign economies. Alarmists are already comparing the possible collapse of the company in terms of consequences with the fall of Lehman Brothers in 2008. Is there any basis for this, The Bell sorted out here .

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Behind the news about quotes and the state of affairs in the company, the story of its founder and largest shareholder Hui Ka Yang is lost, in which one can see several plots: China's economic growth and urbanization, the dependence of big business on political connections, and the consolidation of power in the hands of Xi Jinping. Here we tell how Hui Ka Yang created his empire and why he can lose it.