What just happened with Evergrande?
Evergrande seems to avoid default, though some outlets claim otherwise. This story is from the The China Project A.M. newsletter — sign up for free here.
After avoiding two defaults in October and new bond payments due today, Evergrande seems to have avoided the cliff again.
- Nine hours before a 30-day grace period expired, some of Evergrande’s creditors received their portion of the $148 million in interest originally due last month.
- Mainstream media interpreted those payments as a sign that the developer had sidestepped default yet again.
However: Not everyone agreed with that assessment. For at least one major outlet, the news was so confusing that they called default too soon, while another company outright denied reports of Evergrande’s survival:
- Morning Brew, a U.S.-based business newsletter with 3 million subscribers and nearly 300,000 Twitter followers, tweeted that Evergrande “officially defaulted” in the early afternoon, then walked it back after a Bloomberg report.
- A German financial data service asserted the company did default, claiming it bought Evergrande’s bonds itself to prove the company’s demise and hadn’t been repaid. It even said that Evergrande is preparing bankruptcy proceedings, though those claims couldn’t be verified.
What’s next: China’s Evergrande plan, per a WSJ report, is to slowly dismantle the company, working with local governments to take control of Evergrande’s spending, stick up for consumers by completing their unfinished homes, and even “set up law-enforcement teams to monitor any public discontent.”
