Evergrande avoids default...for now

A bond coupon payment appears to have allowed Evergrande, the Chinese property giant, to avoid defaulting on its debts.

The last-minute payment, according to sources, will give the developer another week to come to terms with the debt crisis.

Evergrande was supposed to officially enter into default on October 23, which is the day the grace period on its first non-payment was supposed to come to an end.

According to Reuters, Evergrande sent $83.5m to a Citibank trustee account on Thursday, just two days before the deadline to pay interest on a US dollar bond.

Investors concerned about the knock-on effects on global markets breathed a huge sigh of relief as Chinese policymakers made reassurances that creditors would be protected.

Attention will now turn to October 29, the date of the next major deadline for meeting payments for bonds, as Evergrande remains the most indebted firm in the world with over $300bn in liabilities.

While the recent payment came out of the blue, little is known about Evergrande’s ability to keep meeting deadlines. This is planting seeds of doubts over the behemoth’s ability to endure the remainder of the crisis.

The Evergrande share price closed 4.26% higher on Friday following the announcement.

Over the past month the developer’s share price is up by 13.98% in a show of resilience. However, over the last six months it is down by over 80%.

Evergrande also confirmed that it intends to prioritise electric vehicles over property over the longer-term. Within ten years, electric vehicles could even be the property developer’s main business.