Goldman Calculates 1 Trillion Yuan In Evergrande Off-Balance Sheet Liabilities

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by Tyler Durden
Thursday, Sep 30, 2021 - 02:20 PM

While China Evergrande is now in unofficial default on at least two offshore bonds, this morning the insolvent developer - showing a far greater concern for its domestic creditors (for reasons explained below) started returning a small portion of the money owed to buyers of its "shadow banking" investment products weeks after people protested against missed payments. According to statement on its website, Evergrande paid the first 10% installment of wealth management products due September on Thursday, in line with a repayment plan announced earlier, noting that payments have been deposited into investors accounts.

As Bloomberg notes, the cash installment plan was one of three repayment options offered by Evergrande earlier this month to pacify angry buyers of the high-yield products. The other choices were for investors to receive heavily discounted properties or offset payables remaining on residential units they have already purchased. For the cash paydown option which was structured similar to a side pocket at a distressed hedge fund, investors can choose to get back 10% of their principal and interest every quarter, with full repayment in two-and-a-half years.

As we discussed recently, the missed payments on 40 billion yuan ($6.2 billion) of wealth products sold by Evergrande itself to retail investors sparked nationwide demonstrations, putting more pressure on Beijing to find a solution and avoid further unrest. More than 70,000 people had purchased the products - some of which were yielding as much as 13% - including many Evergrande employees, as the cash-strapped developer tapped them for funding.