AUD rockets on some kind of Evergrande bond payment

China Evergrande’s main unit Hengda Real Estate has clarified that it will make coupon payments for onshore bonds due tomorrow. It looks like it’s probably a default:

In a vaguely worded exchange filing on Wednesday, the unit said that the issue for its 5.8% 2025 bond “has been resolved via negotiations off the clearing house,” under a section in the filing on the bond interest payment.

And off the AUD goes:

Big miners are ecstatic!

Yields are up and copper is flying. Iron ore is flat.

And more payments dead ahead:


Houses and Holes


  1. russbw the idioticMEMBER

    no idea. Was needed for something. If they are making payment on the due debt, that was one issue markets were worried about

    • Announce coupon payment:
      – share price and bond prices rise
      – sell into rally
      – hide the cash

      This is the end of the beginning but not the beginning of the end

  2. So a company everyone knows is bankrupt just needs to come up with 600 million USD by the end of the year to cover interest payments.
    Meanwhile CCP will help cover local bonds but is not bailing out offshore bonds.
    From exporting viral contagion to exporting financial contagion. Well played China!

    • Good point
      But is life anything more than a can kick?
      My read is that Evergrande’s creditors are willing to take a haircut on the interest in the hope that they can off load the bonds on to some other schmuck or better still trade them in for face value at a soon to open PBoC TARP window.
      It’s not so easy to do this once the bonds are in default, so pretend and extend.
      No recognized default = no CCP moral hazard