Holders of Evergrande-Linked Jumbo Fortune Bond Yet to Be Paid

(Bloomberg) -- Creditors have yet to receive repayment of a dollar bond they say is guaranteed by China Evergrande Group and one of its units, in what could be the firm’s first major miss on maturing notes since regulators urged the developer to avoid a near-term default.

Some investors hadn’t received the principal payment for a note that matured Oct. 3 as of Thursday in Hong Kong, according to people with knowledge of the situation who asked not to be named discussing private matters. As Oct. 3 was a Sunday, the effective due date was Monday. Evergrande did not respond to requests for comment regarding its debt obligations during a holiday in China. 

The next step would be to send a notice to Evergrande and its lawyers to formally request it honor its guarantee obligation, the people said. 

The bond was issued at an initial amount of $260 million by Jumbo Fortune Enterprises, Bloomberg-compiled data show. The firm is a joint venture whose owners include Hengda Real Estate Group, Evergrande’s main onshore unit. Details of the guarantees aren’t broadly known as the note prospectus isn’t publicly available and the deal wasn’t listed on exchanges. 

Holders of the bond have formed a creditor committee and the law firm White & Case LLP is advising various investors with regards to Jumbo Fortune. A spokesperson for White & Case declined to comment. 

Nonpayment of the bond’s principal may constitute a default as the note has no grace period, although five business days would be allowed if the failure to pay were due to administrative or technical error, according to people familiar with the matter. 

Fears of a collapse at Evergrande that triggers financial and economic contagion have prompted investors to scrutinize the company’s upcoming debt obligations. The Jumbo Fortune payment is being closely watched because of the risks of cross-default for the real estate giant’s other dollar bonds. 

Separately, some holders of dollar bonds due in recent weeks have said they didn’t receive interest due, though those notes have 30-day grace periods. 

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With assistance from Bloomberg