China: Evergrande subsidiary Scenery Journey to repay $235 million
Chinese developer Evergrande Group’s subsidiary, Scenery Journey, is to repay $235 million in coupon payments today.
Coupon payments due from Scenery Journey follow the flood of Evergrande coupon payments due earlier this week. Evergrande is obliged to pay a total of 352.5 million overall before the week ends. The wave of payments has been accompanied by growing frustration from creditors which has threatened legal action to defend their rights.
On January 21st, Evergrande released a statement stating that it will be taking on more advisers to steer its debt restructuring process. Recently, the process has been criticized by offshore bond holders for its lack of clarity. This comes as China pivots towards supporting sustainable economic growth and policy for the property market remains tight. While Evergrande and other property developers are encouraged to ensure that homes are delivered, the developer struggles to generate revenue from a weakening property market.
Expect Scenery Journey to miss this round of coupon payments. Evergrande’s hire of new advisers for debt restructuring will mostly benefit domestic creditors. This action will be in line with China’s outlook on its long-term economy, which focuses on sustainable rather than rapid economic development.
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