China Evergrande turns to high-interest bonds to refi massive existing debt

The company raised $1.8B this week; its chairman bought $1B of them

New York Weekend Edition /
Nov.November 03, 2018 02:00 PM
 

(Credit: Max Pixel)

Developer China Evergrande Group is turning to high-interest U.S. dollar bonds to refinance some of its existing debt, which totals $96 billion.

Evergrande, China’s third-largest developer by sales, raised $1.8 billion in dollar bonds this week, agreeing to pay between 11 and 13.75 percent in interest, the Wall Street Journal reported. Evergrande’s billionaire chairman and majority shareholder Hui Ka Yan bought $1 billion of the bonds on offer to show his “support and confidence in the company.”

On the whole, developers in the country are facing $34.8 billion in onshore bonds and $17.9 billion in offshore bonds mature or become puttable in the next 12 months, according to Moody’s. Many companies have turned to offshore bonds to refinance this debt. According to Dealogic, Chinese property developers have issued $23 billion in offshore high-yield bonds so far this year.

“The refinancing cost is rising because of the tight liquidity facing the whole real estate sector, driven by high refinancing needs and likelihood of a slowdown in property sales growth,” Franco Leung, associate managing director at Moody’s Investors Service, told the South China Morning Post. “We expect some small and low-rated developers to face high refinancing risks.” [South China Morning Post, WSJ] — Kathryn Brenzel


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
The SASB market has produced several massive transactions, like a $4.65 billion loan for the Extended Stay America portfolio or SL Green Realty’s $3 billion refinancing of One Vanderbilt office tower in Manhattan (iStock, KPF, Getty)
CMBS loan issuance is booming — but not in the usual areas
CMBS loan issuance is booming — but not in the usual areas
At 432 Park, a $30M condo is in default and its owner has vanished
At 432 Park, a $30M condo is in default and its owner has vanished
At 432 Park, a $30M condo is in default and its owner has vanished
817 Broadway and Taconic co-CEOs Charles Bendit and Paul Pariser (Taconic)
Taconic lands $125M refi for renovated Union Square office building
Taconic lands $125M refi for renovated Union Square office building
Lev Capital raises $30M Series A round
Lev raises $30M Series A round
Lev raises $30M Series A round
Tavros Capital Partners' Nicholas Silvers and Dov Barnett with a rending 351 West 14th Street (Tavros, BKSK Architects)
Tavros nabs refi on Meatpacking District properties it wants to redevelop
Tavros nabs refi on Meatpacking District properties it wants to redevelop
Clockwise from left: One Vanderbilt, 111 Wall Street, 520 and 524 Broadway (SL Green and Google Maps)
These were the largest Manhattan real estate loans in June
These were the largest Manhattan real estate loans in June
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...