A bank advising Evergrande’s lenders says the embattled property developer is expected to default, report says

A view of Evergrande Center building with a Chinese flag in the foreground.
Evergrande is a hugely indebted Chinese property developer.
  • A bank advising Evergrande's lenders has said it expects a default soon, Reuters reported.
  • Evergrande is a huge Chinese property developer that owes more than $300 billion.
  • It has recently missed two payments, raising the prospect that it could collapse and knock the global economy.

An investment bank advising some of Evergrande's lenders has said the embattled Chinese property developer is expected to default after missing recent payments, Reuters reported on Friday.

Evergrande missed payments on two dollar-denominated bonds worth $131 million. Both have 30-day grace periods before nonpayment officially constitutes a default, ending in mid-October.

A group of bondholders have hired US investment bank Moelis & Co as advisers, along with law firm Kirkland & Ellis, Reuters reported.

Bert Grisel, a managing director at Moelis, told Reuters there had been little communication from Evergrande and that the bondholders and their advisors think a default is coming soon.

"We all feel that an imminent default on the offshore bonds is, or will occur, in a short period of time," Grisel said.

He said there had not been any "meaningful dialogue with the company, or provision of information."

Evergrande is China's second-biggest property developer and is teetering on the brink of collapse, owing more than $300 billion.

Read more: Investors should watch these 4 key barometers to gauge whether the $52 trillion Chinese real estate market could implode in the aftermath of the Evergrande crisis, according to Goldman Sachs

The looming crisis shook international stock markets in September as investors fretted about the knock-on effects of such a big default on the global economy.

Evergrande has said little about its situation, as its financial woes have intensified. The uncertainty has unnerved investors in China's property market, in which high levels of debt are common. Property bonds and shares sold off sharply again on Friday.

Bloomberg reported on Thursday that holders of $260 million worth of bonds issued by Jumbo Fortune Enterprises and guaranteed by Evergrande are yet to be paid, despite the bond coming due on Monday.

Shares in Evergrande have been suspended from trading in Hong Kong since Monday pending an announcement about a "major transaction."

Chinese financial news services Cailan reported rival Hopson Development plans to buy 51% of Evergrande's property management unit, Evergrande Property Services Group. State media outlet Global Times also reported on the deal.

Moelis & Co and Evergrande did not immediately respond to requests for comment.

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