Evergrande investors in dark as no news on interest payment emerges

Global investors are in guessing mode as a crucial date for a key interest payment passed without a comment from indebted property company Evergrande. There are fears that China will let bondholders abroad swallow large losses. The liquidity crisis at the world's most indebted company is deepening.

Evergrande owes $305 billion, has run short of cash and investors are worried a collapse could pose systemic risks to China's financial system and reverberate around the world.

Deadline for payment of interest of USD 305 billion was Thursday (September 24). Bondholders have not been paid or heard from the company, reported Reuters quoting two people familiar with the situation.

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The firm has a 30-day grace period and will default if that passes without payment.

Evergrande's silence on the dollar bond interest payment and another $47.5 million payment due next week contrasts with its treatment of its domestic investors. The company this week resolved one coupon payment on a domestic bond.

"This is part of the tactics of any sovereign driven restructuring process - keeping people in the dark or guessing," said Karl Clowry, a partner at Addleshaw Goddard in London.

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"The view from Beijing is offshore bondholders are largely Western institutions and so can justifiably be given different treatment. I think people think it's still a falling knife."

China's central bank again injected cash into the banking system on Friday, seen as a signal of support for markets. But authorities have been silent on Evergrande's predicament and China's state media has offered no clues on a rescue package.

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"These are periods of eerie silence as no-one wants to take massive risks at this stage," said Howe Chung Wan, head of Asia fixed income at Principal Global Investors in Singapore.

"There's no precedent to this at the size of Evergrande ... we have to see in the next ten days or so, before China goes into holiday, how this is going to play out."

Evergrande appointed financial advisers and warned of default last week and world markets fell heavily on Monday amid fears of contagion, though they have since stabilised.

(With inputs from agencies)