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China debt crunch

Evergrande favors domestic investors as default looms

Offshore bondholders last in line behind households, suppliers, local creditors

HONG KONG -- China Evergrande has announced that it will make interest payments on domestically issued bonds, even as the property developer teeters on the brink of a dollar debt default, deepening suspicions among offshore investors that they will be last in line for repayment.

Hengda, Evergrande's primary unit on the mainland, said in a statement late Friday that it will pay coupons worth 121.8 million yuan ($19 million) on its October 2025 bond, which comes due Tuesday. That contrasts with the company's failure to meet three rounds of bond interest payments in the offshore market totaling $277 million since late September. The official deadline for the company to be declared in default comes this week.

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