China Evergrande Group, a major player in China’s property sector, has recently filed for Chapter 15 bankruptcy protection in New York. With $28.1 billion worth of outstanding bonds, the majority of which will mature in 2025, this move allows the company to utilize domestic courts in the United States, safeguarding its assets from American creditors while undertaking restructuring efforts abroad.
The Scope of Evergrande’s Bond Maturities
According to BondCliQ Media Services, a renowned data solutions company, the chart below illustrates the distribution of Evergrande’s near-term bond maturities:
Evergrande’s Troubles Reflecting China’s Property Sector
Evergrande, the second-largest developer in China, faced a default in 2021, highlighting the highly leveraged nature of the country’s property industry. As concerns mount, investors are now turning their attention to another developer named Country Garden. In August, Country Garden failed to fulfill interest payments amounting to $22.5 million on its dollar-denominated bonds.
Net Buying Trends Amidst the Chapter 15 Announcement
Despite the turmoil surrounding Evergrande, data reveals a limited increase in net buying activities for the company’s most active bonds leading up to the Chapter 15 bankruptcy filing. Findings are depicted in the following chart:
Evergrande’s Bonds Experience Sharp Declines in 2021
Persistent challenges have contributed to a downward trajectory for Evergrande’s most active bonds throughout the year. As illustrated in the chart below, their value has fallen below 5 cents on the dollar: