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Evergrande Shares Decline for Second Consecutive Day Following Bond Payment Default in China

Evergrande Group, a prominent Chinese real estate development company, has experienced a second consecutive day of falling stock prices, plummeting by as much as 8% on September 26. The decline comes in the wake of Evergrande’s inability to meet its domestic bond debt obligations.

Hengda Real Estate Group, a subsidiary of Evergrande, made a disclosure to the Shenzhen Stock Exchange on Monday, confirming the company’s failure to fulfill principal and interest payments amounting to 4 billion yuan ($547 million). These payments were due on July 25 but remained unpaid until September.

This latest development follows Evergrande’s revelation over the weekend that it is unable to issue new bonds due to an ongoing investigation into Hengda Company by Chinese authorities. Consequently, Evergrande’s share price plummeted by a staggering 22% yesterday.

Hengda Company has conveyed its intention to initiate negotiations with bondholders promptly in an effort to find a viable solution to the debt dilemma. Concurrently, the company is actively working to mitigate debt-related risks while safeguarding the interests of its creditors.

This default incident adds to the litany of challenges that Evergrande has faced since the revelation of its financial troubles in 2021, compounded by a series of defaults on overseas debt towards the end of the same year.

Evergrande is currently in the process of seeking approval from its creditors to execute a comprehensive restructuring plan for its substantial overseas debt portfolio, which amounts to $31.7 billion. This encompasses various financial instruments such as bonds, collateral, and asset repurchase agreements.

The ongoing financial turmoil surrounding Evergrande remains a focal point of concern for both domestic and international markets, with stakeholders closely monitoring developments as the company navigates the complexities of its debt restructuring efforts. The outcome of these negotiations will have far-reaching implications for Evergrande and the broader real estate industry in China.

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