-- Evergrande staved off default by making an overdue interest payment to international bondholders

-- It remitted the funds for a key interest payment on Thursday, that was due for September 23

Troubled Chinese real estate giant, Evergrande made an overdue interest payment to international bondholders, allowing it to stave off a widely expected default. The news was reported by the state-owned Securities Times on Friday.

The company remitted the funds for a key interest payment on Thursday, which was due on September 23, ahead of a 30-day grace period that ended on Saturday.

The Securities Times reported that the real-estate developer sent $83.5 million to the trustee for the dollar bonds. The financial institution would in turn pay bondholders.

The Evergrande crisis in China has kept investors on the edge. The company was expected to default on the payouts totaling US$83 million on a 5-year USD-denominated bond of an initial size of $2 billion. 

READ MORE: What is Evergrande crisis? Why are world markets jittery over Chinese group’s likely default?

The Shenzhen-based group is one of China’s biggest developers, and is most indebted with more than $300 billion in total liabilities, including some $89 billion in interest-bearing debt, as of the end of June.

The news boosted the shares of Evergrande closing 4.26% higher.

STILL NOT OUT OF THE WOODS

Evergrande has to pay an additional $45 million by October 29, when the grace period, on interest payments on $7 billion international debt that were due on September 29, 2021, ends. A likely default on these interest payments could be more disastrous for global markets. 

Three other real estate developers in China including Fantasia Holdings, have defaulted on their debt in recent days.

READ MORE: Chinese property developer Fantasia defaults on $205 million bond

More than one million Chinese home buyers have bought apartments from the Evergrande and are waiting for them to be built and delivered. Construction workers and subcontractors who are waiting to be paid would be hit by the likely default on interest payments.

Data from China’s National Bureau of Statistics stated that prices for new houses fell for the first time in more than six years across China, in September compared with August. 

The latest payment might appease some of the bondholders but Evergrande needs to come up with more money to meet deadlines for other debt payments in the future.