“Evergrande’s 8.25% bonds, which received no coupon payments last week, trade at around 29 cents per dollar, a price that means investors expect them to be less than a third of its original value Getting bonds back ”, the diary called.
A big X-factor would come from large domestic stakeholders, according to Karl Clowry of Addleshaw Goddard LLP in London, who represents a number of offshore bondholders. “It’s more about how much the Chinese authorities and large onshore players allow foreign bondholders,” he said diary.
For offshore debtors trying to file a claim, the process could be thorny and confusing. According to diary, China Evergrande is incorporated in the Cayman Islands and has subsidiaries in the British Virgin Islands. And while the conglomerate has some assets in Hong Kong, most of them are in mainland China.
Since the bonds are subject to the jurisdiction of New York law, some legal experts suggested that bondholders might consider filing a lawsuit there. But even if they prevail in a court in New York, the Cayman Islands or the British Virgin Islands, the judgments would have to be carried out in China.
Of course, the Chinese authorities have some interest in safeguarding the interests of the offshore bondholders. A negative experience could make them less willing to lend to other private Chinese companies that also need to refinance their own dollar-denominated debt.