Jakarta, CNBC Indonesia – Approaching the interest payment deadline, China’s largest property developer Evergrandre announced that it would sell its shares worth US$ 1.5 billion or equivalent to Rp 22 trillion (exchange rate of Rp. 14,300/US$) or 9.9 billion yuan (exchange rate of Rp. 2,211/yuan). ) in Shengjing Bank to the state-owned asset management company.
As is known, this property giant from the Bamboo Curtain country is burdened with debts of more than US$ 300 billion or equivalent to Rp. 4,290 trillion, and is still struggling to raise funds.
The company faces a deadline for payment of bond interest of US$ 47.5 million or equivalent to Rp 679 billion this Wednesday (29/09/2021) to banks and suppliers.
In its filing to the Hong Kong Exchange on Wednesday morning, reported by CNBC International, Evergrande said that it had signed a deal to sell the 1.75 billion shares it owns in Shengjing Bank to Shenyang Shengjing Finance Investment Group, at 5.70 yuan per share.
The number of shares is 19.93% of the issued share capital in the bank.
Evergrande had previously sold a 1 billion yuan stake in Shengjing Bank.
In the statement, Evergrande said that its liquidity problems had materially affected Shengjing Bank.
By selling shares to the state-owned asset management company, Shenyang Shengjing Finance Investment Group, it is hoped that operations at Shengjing Bank will stabilize again.
Evergrande’s shares on the Hong Kong Stock Exchange jumped nearly 10% in early trading on Wednesday morning.
Bond Interest Maturity
Evergrande’s problems came to the fore after two warnings in early September of a possible default on its debts.
Worries continue to haunt investors whether the company will fail to meet global markets despite the US stock market rebound at the end of last week.
Evergrande missed a coupon payment of $83.5 million last week. The coupon bonds are part of its foreign debt which will mature in March 2022 and is worth US$ 2 billion or Rp 29 trillion.
Even Evergrande did not provide any clarification regarding the delayed payment due last week.
But so far Evergrande is technically still not in default because it still has up to 30 days from the due date.
The market is still watching whether the company will meet its next $47.5 million interest payment due this Wednesday for the $1 billion dollar bond due in March 2024.
With investors exiting Evergrande bonds and falling prices, the yield on this 7-year bond has jumped to 90%, from just around 14% earlier this year.
Until the end of this year, Evergrande has interest payments due monthly in October, November and December.
Analysts at CNBC International said the company may prioritize domestic investors, who are the main holders of domestic bonds, over foreign investors, who mostly hold foreign debt.