Shares in Evergrande rose over 4% on Friday on reports that the cash-strapped property developer has paid off an $83.5m interest due on a dollar bond averting default at the last minute.
State-affiliated news agency Securities Times reported Evergrande has paid off its interest due days before the end of a 30-day grace period after which the bond would have officially defaulted.
Shares in Evergrande came off an over two-week trading halt to tumble over 12% on Thursday. Evergrande shares recovered to trade higher at HKD2.68 by Friday lunch as Reuters and Bloomberg confirmed the transfer of the $83.5m interest payment citing internal sources.
Mountain of debt
Property sector in Hong Kong was up over 1.5% as news of the remittance brought temporary relief to investors.
Evergrande still has a mountain of debt estimated at over $300bn.
Financial news agency REDD reported that Evergrande has secured a three month-plus extension on a $260m bond which had matured on 3 October after agreeing to provide extra collateral.
Hopson Development statement
Earlier this week, Evergrande’s billion-dollar stake sale in its property management unit to real estate peer Hopson Development collapsed, fuelling default concerns with Evergrande.
On Friday, suitor Hopson Development clarified that the deal was terminated after Evergrande asked it to make substantial changes to the terms agreed on 1 October, including “terms of payment of the consideration by paying the consideration to the vendor (Evergrande’s unit) directly instead.”
Whereas, Evergrande said on Wednesday that it “had reason to believe that the purchaser had not met the prerequisite to make a general offer for shares in Evergrande Property Services.”
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