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Evergrande Bonds Pledged at 53% Discount in China Funding Market

  • Property giant attempting to generate cash to pay down debt
  • Several repo traders have long shunned the debt as collateral
Evergrande Faces Crisis of Confidence Over $120 Billion Debt
Photographer: Chan Long Hei/Bloomberg

China Evergrande Group bonds are suffering steep haircuts in a key onshore funding market, showing just how risky the bonds are perceived to be by mainland dealers.

Holders of Evergrande’s 2023 yuan bond are being forced to accept a 53% discount to pledge the note as collateral in the repo market, according to China Securities Depository and Clearing Corp. data, versus 28% in April. A markdown of around 57% of the bond’s face value was seen in the wake of the developer’s previous liquidity crisis in October, the data showed.