A troubled Chinese developer whose struggle to avoid a multibillion-dollar debt default has rattled global financial markets made an overdue $45.2 million payment on a bond Friday, one day before it would have been declared in default, a newspaper reported.
Evergrande Group made the payment on a $951 million bond that matures in March 2024, The South China Morning Post newspaper reported, citing unidentified sources.
Friday was the end of a 30-day grace period after Evergrande missed a payment due Sept. 29. It was the second time the developer, which owes 2 trillion yuan ($310 billion), paid bondholders one day before it would be declared in default.
Evergrande’s struggle to comply with tighter official curbs on borrowing has prompted fears a default might trigger a financial crisis. Officials have tried to allay investor fears by saying the debt problems can be controlled and there should be no impact on the financial industry.
The ruling Communist Party is pressing companies to reduce debt levels it considers dangerously high.
Economists say Beijing can prevent a credit crunch if Evergrande defaults on debts to Chinese banks and bondholders but wants to avoid appearing to arrange a bailout while it tries to force other companies to rely less on borrowed money.
A slowdown in construction helped depress China’s economic growth to an unexpectedly low 4.9% over a year earlier in the three months ending in September. Forecasters expect growth to decelerate further if the financing curbs stay in place. MDT/AP
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