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World Evergrande investors in the dark over $83m payment

09:25  24 september  2021
09:25  24 september  2021 Source:   bbc.com

Evergrande: China's fragile housing giant

  Evergrande: China's fragile housing giant Chinese housing giant Evergrande is one of the country's largest private conglomerates and world's most indebted property developer, teetering on the brink of bankruptcy after years of rapid growth and a buying spree. With a presence in more than 280 cities, Evergrande is one of the largest private companies in China and one of its leading real estate developers. The firm made its wealth over decades of rapid property development and wealth accumulation as China's reforms opened up the economy.

Investors were left in the dark after troubled property giant Evergrande missed a deadline for a $83.5m (£61m) interest payment.

a man standing in front of a building © Reuters

The Chinese firm is yet to make an announcement regarding the payment, which was due on Thursday.

Earlier in the week, the company said it struck a deal over another interest payment worth $35.9m.

Global markets have been rocked by concerns over the firm's ability to pay more than $300bn of debts.

Evergrande's shares were trading almost 10% lower in Hong Kong on Friday after jumping more than 17% the previous day.

  • What is Evergrande and is it too big to fail?

Meanwhile, Chinese authorities have reportedly warned local governments to be prepared for the potential failure of Evergrande.

China: Flutable owners request accounts at Evergrand

 China: Flutable owners request accounts at Evergrand © Christmas Celis Gathering of Spoliated Owners in front of the seat of the Evergrande Real Estate Group in Shenzhen, September 14, 2021 "They owe me more than 10 million!": Mrs Xia as Dozens of spoliated owners manifest in front of the headquarters of the Chinese real estate Giant Evergrande, who admitted Tuesday not to be able to cope with his obligations. Evergrande, crushed by a liability of nearly 260 billion euros, is the largest real estate developer in China.

The actions being ordered were described as "getting ready for the possible storm," according to the Wall Street Journal, which cited officials familiar with the discussions.

The move has been seen by some investors as a further sign that the Chinese government is reluctant to bail out the crisis-hit real estate giant.

The Chinese government has made no major announcements on Evergrande, and state media has given few clues about Beijing's thinking on the firm's debt crisis.

The company is due to make a series of other bond interest payments in the coming weeks.

Under agreements with investors, the company has a 30-day grace period before the missed payment on the $83.5m offshore bond becomes a default.

Some analysts have cautioned that the failure of such a large and heavily-indebted property developer could have a major impact on the Chinese economy, and could potentially spread to the global financial system.

The real estate industry is a major component of the Chinese economy, accounting for almost 30% of gross domestic product, so any impact on the sector is likely to hit the country's already slowing growth.

And while there are major risks to both the Chinese property industry and the country's wider economy, only around $20bn of Evergrande's debts are held by foreign investors.

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China Evergrande leaves bondholders guessing if it will pay up .
Its silence on its offshore payment dues has left global investors asking if they will have to swallow large losses.With liabilities of $305bn, Evergrande has sparked concerns its woes could spread through China’s financial system and reverberate around the world – a worry that has eased with the Chinese central bank promising to protect homebuyer interest.

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