China Evergrande Group has missed its third round of bond payments in three weeks, intensifying market fears over contagion involving other property developers as a wall of debt payment obligations comes due.
Some bondholders said they did not receive coupon payments totaling $148 million U.S. on Evergrande's April 2022, April 2023 and April 2024 notes that are due today (October 12), following two other missed payments in September.
That puts investors at risk of large losses at the end of 30-day grace periods as the developer wrestles with more than $300 billion U.S. in liabilities. A total of $92.3 billion U.S. of bonds issued by Chinese developers will be due in the next year, according to Refinitiv data.
Trading of high-yield bonds remains soft following a rout on fears about fast-spreading contagion in the $5-trillion U.S. sector, which accounts for a quarter of the Chinese economy and is a major factor in policymaking.
Shanghai Stock Exchange data shows the top five losers among exchange-traded bonds are all property developers.
While global attention has been focused on missed debt payments by Chinese property issuers, market indicators suggest that worries about contagion and a slowing economy are spreading further.
The cost of insuring against a China sovereign default continues to rise, with five-year credit default swaps, which investors typically use as a hedge against rising risk, hitting their highest point since April 2020.
Separately, Evergrande's electric vehicle unit rose more than 10% after it vowed to start producing cars next year.
