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Troubled real estate giant China Evergrande made another debt payment before Friday, avoiding a second default in two weeks, according to one of the company’s bondholders.
Speaking to discuss the matter on condition of anonymity, this person said that the company made an interest payment due on September 29. Evergrande had a 30-day grace period on its bond payment; The extension would expire on Friday.
The company did not immediately respond to a request for comment on the payment.
The payment comes a week after the world’s most indebted real estate developer narrowly avoided defaulting on another bond. Evergrande paid $83.5 million in interest to bondholders last Friday, According to the official newspaper, the Securities Times. This payment also came just one day before the default. The interest payment due this Friday totaled $45.2 million.
Under the weight of more than $300 billion in debt, Evergrande is trying to sell parts of its vast empire to raise enough cash to pay off its creditors. Last week, one of these deals – largely seen as a last resort – fell through. Evergrande warned in its securities filings that it cannot “guarantee it will be able to meet its financial obligations” given the “difficulties, difficulties and uncertainties” it faces in selling its assets.
The company’s financial crisis is testing the determination of Chinese officials who stepped in immediately to save once struggling giants like Evergrande. They promised to clean up China Inc.’s mountain of debt and put an end to the real estate industry’s excessive borrowing habits.
But if authorities let Evergrande fail, they could hurt some of the estimated more than one million Chinese home buyers who have bought apartments from the company and are waiting for it to be built. A collapse could also affect construction workers and subcontractors waiting for payment.
Alexandra Stevenson contributing reporting.
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