China's Evergrande makes bond payment to avoid default

13:22, 22 October 2021
China's Evergrande makes bond payment to avoid default Photo: Jason Lee/REUTERS

The Chinese real estate company Evergrande collected finances to pay on a US dollar bond in order to avoid missing the deadline which would make the company default, a person familiar with the matter told Reuters

The company transferred $83.5 million to Citibank. The sum will be used to pay bond coupons with the deadline set at the 23rd of October.

Many investors considered Evergrande “too big to fail” however its financial problems arose fears that if the company defaults the fallout will be felt across all markets first impacting China’s real estate sector and then the whole of the world. 

The company has over $300 billion in liabilities with the next deadline being set on the 29th of October.

Whether the company will secure the funds to pay it or not is still unknown.

However, considering that the company has found a way to secure the upcoming payment it seems likely that at least the next one will be paid too.

The company has already missed four coupon payments in September and October.

Evergrande’s problems began after the Chinese government started limiting debt in relation to a company’s cash flow, making companies like Evergrande that has been excessively using debt to grow these past years start facing problems.