Cash-strapped developer China Evergrande Group once again averted a destabilizing default with a last minute bond payment but the reprieve did little to alleviate strains in the country’s wider property sector.
Customers of international clearing firm Clearstream received overdue interest payments on three dollar bonds issued by Evergrande, a Clearstream spokesperson said on Thursday.
Evergrande, the world’s most indebted developer, has been stumbling from deadline to deadline in recent weeks as it grapples with more than $300 billion in liabilities, $19 billion of which are bonds denominated in U.S. dollars held by foreign investors like Clearstream.
The latest payments were made at the end of a 30-day grace period that ended Wednesday, and were the third time in the past month the Chinese property developer has paid up perilously close to a deadline. The bonds were due to pay out more than $148 million US in interest payments.
A failure to pay would have resulted in a formal default by the company and triggered cross-default provisions for other Evergrande dollar bonds, exacerbating a debt crisis looming over the world’s second-largest economy.
Shares in numerous Chinese real estate companies have been hammered amid the worries. (Kyle Lam/Bloomberg)
Problems remain
Although the developer managed to sidestep imminent disaster, woes in China’s $5 trillion property sector showed no signs of abating with a wall of debt coming due.
“The near-term fix seems to be happening but there’s a long way to go before this issue gets sorted out. These are early days,” said a source with knowledge of the matter, referring to Evergrande and declining to be named without authorisation to talk to the media.
Evergrande did not respond to Reuters request for comment.
Bankers and analysts told Reuters that Beijing would stand firm on policies to curb excess borrowing by property developers even as it makes financing tweaks amid an industry liquidity crunch.
Next major payment due in December
Evergrande has coupon payments totalling more than $255 million due on Dec. 28. It has come under pressure from its other creditors at home and a stifling funding squeeze has cast a shadow over hundreds of its residential projects.
Investor focus is now also shifting to other cash-strapped developers which have a string of offshore payments coming due in the short term, including Kaisa Group.
Kaisa has the most offshore debt of any Chinese developer after Evergrande and pleaded for help from creditors this week. It has coupon payments totalling over $59 million due on Thursday and Friday, with 30-day grace periods for both.
It was not immediately known if Kaisa, which became China’s first property company to default on an overseas bond in 2015, has made payment for the tranche due on Thursday. It has already missed payments on some wealth management products at home.
The developer did not immediately respond to Reuters request for comment.
WATCH | Why the Evergrande crisis matters:
Why Evergrande matters
2 months ago
Jia Wang, Director of the China Institute at the University of Alberta, explains why Evergrande is a big risk for China’s entire housing market and broader economy. 0:54
Property bubble
While the U.S. Federal Reserve this week warned China’s troubled property sector could pose global risks, there were no clear indications Beijing would step in with a broader, national plan to tackle the issue.
Chinese regulators have in recent weeks, however, sought to reassure investors and homebuyers, saying risks were controllable and excessive credit tightening by banks was being corrected.
Developers including Evergrande and Kaisa have also been looking to sell some of their business assets in China and elsewhere to raise cash amid rapidly growing repayment obligations.
British electric motor maker Saietta said on Thursday that it is acquiring electric powertrain company e-Traction from Evergrande’s automotive unit in a deal worth up to 2 million euros ($2.31 million).
TORONTO – Restaurant Brands International Inc. reported net income of US$357 million for its third quarter, down from US$364 million in the same quarter last year.
The company, which keeps its books in U.S. dollars, says its profit amounted to 79 cents US per diluted share for the quarter ended Sept. 30 compared with 79 cents US per diluted share a year earlier.
Revenue for the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs, totalled US$2.29 billion, up from US$1.84 billion in the same quarter last year.
Consolidated comparable sales were up 0.3 per cent.
On an adjusted basis, Restaurant Brands says it earned 93 cents US per diluted share in its latest quarter, up from an adjusted profit of 90 cents US per diluted share a year earlier.
The average analyst estimate had been for a profit of 95 cents US per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
ST. JOHN’S, N.L. – Fortis Inc. reported a third-quarter profit of $420 million, up from $394 million in the same quarter last year.
The electric and gas utility says the profit amounted to 85 cents per share for the quarter ended Sept. 30, up from 81 cents per share a year earlier.
Fortis says the increase was driven by rate base growth across its utilities, and strong earnings in Arizona largely reflecting new customer rates at Tucson Electric Power.
Revenue in the quarter totalled $2.77 billion, up from $2.72 billion in the same quarter last year.
On an adjusted basis, Fortis says it earned 85 cents per share in its latest quarter, up from an adjusted profit of 84 cents per share in the third quarter of 2023.
The average analyst estimate had been for a profit of 82 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
TORONTO – Thomson Reuters reported its third-quarter profit fell compared with a year ago as its revenue rose eight per cent.
The company, which keeps its books in U.S. dollars, says it earned US$301 million or 67 cents US per diluted share for the quarter ended Sept. 30. The result compared with a profit of US$367 million or 80 cents US per diluted share in the same quarter a year earlier.
Revenue for the quarter totalled US$1.72 billion, up from US$1.59 billion a year earlier.
In its outlook, Thomson Reuters says it now expects organic revenue growth of 7.0 per cent for its full year, up from earlier expectations for growth of 6.5 per cent.
On an adjusted basis, Thomson Reuters says it earned 80 cents US per share in its latest quarter, down from an adjusted profit of 82 cents US per share in the same quarter last year.
The average analyst estimate had been for a profit of 76 cents US per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
