As China Evergrande reportedly begins negotiating creative ways to repay billions to offshore bondholders, a paying agent for one of the controversial real estate giant’s USD-denominated bonds has sent a letter to investors officially confirming their default. .
dr. Marco Meltzer, a respected German financial analyst and outspoken critic of Evergrande’s handling of the debt crisis, said earlier this week he received a letter from Citi virtually confirming the company’s bankruptcy.
Citigroup acts as paying agent for some of Evergrande’s offshore bonds. Paying agents are intermediaries who accept payments from bond issuers and distribute the funds among the bondholders.
“Just this week I received an official letter from the agent Citibank that Evergrande has not paid our bond and that I will never see my money again,” said Dr. Meltzer.
“As you know, I had bought bonds in November last year to see if the media coverage of the real estate giant was accurate, as they repeatedly reported that Evergrande was doing well.
“Unfortunately, this media coverage seems to be running its course.”
Meltzer shared a copy of the letter (published in the lead image of this article) stating that Evergrande and its subsidiaries “have paid no interest due on April 11, 2022.”
Last year, a Research Asia Markets highlighted a litany of examples where missed Evergrande offshore bond payments were sugarcoated in the financial press by anonymous sources claiming default had been avoided, leading many investors to overlook the risk the crisis poses to global financial markets .
Anonymous sources claim Evergrande is collaborating with foreign creditors
Against the letter from Dr. Meltzer in van Citi has been yet another case of anonymous sources claiming Evergrande is negotiating ways to repay some $19 billion from offshore bondholders.
A Reuters article quoted two unnamed sources as saying that Evergrande is negotiating repayment of its offshore debt in installments over seven to 10 years and also offers debt-for-equity swaps involving its Hong Kong-listed real estate services and electric vehicle subsidiaries.
But Dr. Meltzer is again skeptical.
“How can that be, please, when even the cop says Citibank they’re broke?” he said.
“Unfortunately, I’m afraid that’s anything but better, as shares in Evergrande Property Services and Evergrande New Energy Vehicle, as well as its parent company, have been suspended for about two months.
“None of the companies has yet reported their 2021 financial results as audit work is still ongoing. The property management unit has even been under internal investigation since March to find out how banks seized its 13.4 billion yuan in deposits pledged as collateral against third-party guarantees.”
Fitch Stops All Reviews on Evergrande and Hengda and Tianji Subsidiaries
Earlier this week, China Evergrande’s deepening debt crisis was underlined when credit rating agency Fitch withdrew the ratings of Evergrande and two of its subsidiaries.
“Fitch has withdrawn the ratings because Evergrande and its subsidiaries have chosen to no longer participate in the rating process,” Fitch said in a statement. pronunciation†
“Fitch will no longer have enough information to hold the ratings. Accordingly, Fitch will no longer provide assessments or analytics coverage for Evergrande and its subsidiaries.”
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