(Yicai Global) June 24 -- China Evergrande Group’s shares gained after the real estate giant said it had arranged HKD13.6 billion (USD1.74 billion) of funds to pay back offshore bonds due to mature on June 28.

Evergrande’s shares [HKG: 3333] ended 4.2 percent higher today at HKD10.90 (USD1.40) each, after earlier jumping as much as 8.8 percent.

Evergrande has put the funds into a debt repayment account to pay off USD1.7 billion in principle and interest on the bonds, the Shenzhen-based company said in a filing this afternoon. Thereafter, Evergrande will not have any further debt due before next March, it added.

Earlier rumors said the heavily indebted property developer would not be paying off commercial paper. On June 7, the group said some of its project companies had failed to repay a “very small” amount of commercial paper on time, but it said it was taking the matter seriously and would arrange repayment. 

On June 22, Fitch Ratings cut the long-term foreign-currency issuer default ratings for Evergrande and its units Hengda Real Estate Group and Tianji Holding to B from B+, with a negative outlook.

Evergrande's leverage, measured by net debt/adjusted inventory, fell to 35 percent last year from 44 percent in 2019, while total interest-bearing debt fell by CNY83 billion (USD1.3 billion) to CNY716 billion (USD110.6 billion), Fitch said in the report. 

Evergrande plans to reduce its total debt load by CNY150 billion this year by speeding up sales and tightening purchases of land use rights. Fitch said it believes the debt reduction plan is “achievable, but it is subject to meaningful execution risk and may also negatively affect the company's business profile in the medium term.”

In the first five months of 2021, Evergrande's contracted sales rose 4.5 percent on the year to CNY285.2 billion, or roughly 38 percent of its annual target of CNY750 billion, with the contracted sales area up 12.5 percent at 33.8 million square meters. 

Evergrande is set to get CNY2.5 billion (USD386.2 million) from sales of 29.99 percent of its equity in China Calxon Group, but Fitch said the amount was “immaterial compared with its debt.”

Editor: Tom Litting