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Evergrande restructuring is a warning to China’s other creditors
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China Evergrande has finally laid out a debt-restructuring plan for its offshore creditors. The pain for its long-suffering debt investors, however, isn’t over yet.
That also gives a warning to owners of other offshore property debt. Many investors piled into those bonds on the assumption that Beijing would never allow a truly widespread property bust because of the fraught politics of homeownership in China. That assumption proved wrong, and now they are likely to pay a steep price.
Evergrande on Wednesday unveiled a plan to restructure $19 billion of its offshore debt. Creditors will be given two options: swap their bonds into new notes with a tenor of 10 to 12 years or accept a combination of new five- to nine-year bonds and securities that could convert into shares of Evergrande and its two Hong Kong-listed units, including its property management unit.