China Evergrande wants to get into e-mobility

China Evergrande wants to get into e-mobility

China Evergrande wants to get into e-mobility
A grace period expires on this Saturday for a multi-million dollar interest payment that would have been due on September 23rd.  Source: Bloomberg

According to a media report, the ailing Chinese real estate company Evergrande wants to focus on electric vehicles in the future. The change should take place over the next ten years, the state newspaper “Securities Times” quoted the chief Hui Ka Yan. Real estate trading should be reduced to 200 billion yuan (about 27 billion euros) annually over the same period. In 2020, real estate sales exceeded 700 billion yuan, according to Hui.

According to an insider, the group had previously transferred millions of funds to prevent an impending payment default. As the person familiar with the matter told the Reuters news agency on Friday, the company is said to have transferred $ 83.5 million in coupon payments to an escrow account with Citibank. So Evergrande could settle upcoming payments for a dollar bond. A grace period expires on this Saturday for a multi-million dollar interest payment that would have been due on September 23rd.

The insider confirmed a report that appeared in the Securities Times on Friday. Accordingly, Evergrande was able to pay out all bondholders before the end of the grace period on October 23. The news brought some relief to investors and regulators. The real estate company’s dollar bonds skyrocketed on Friday morning. Evergrande’s shares also gained about four percent.

Evergrande is sitting on a mountain of debt equivalent to around $ 300 billion. In view of the size of the liabilities, the financial markets have recently been worried that a collapse of the group could trigger a conflagration in the Chinese real estate sector. Failure to pay the interest could have resulted in a formal default by the company and default on other Evergrande dollar bonds.

“This is a positive surprise,” said James Wong, portfolio manager at GaoTeng Global Asset Management, adding that many would have expected a default. The news will boost bondholders’ confidence, Wong said.

Evergrande has expired approximately $ 280 million in coupon payments due on October 23, 29, and October 11 on its dollar bonds. A grace period of 30 days was set in motion in each case. Evergrande was initially unable to provide any comment on the information on the interest payment made.