China’s Guangdong summons Evergrande boss after debt repayment warning

The company’s logo appears at the headquarters of China Evergrande Group in Shenzhen, Guangdong Province, China, September 26, 2021. REUTERS / Aly Song

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  • Evergrande says you may not have enough money to meet the obligations
  • China’s central bank and regulators intervene to try to reassure the market

BEIJING (Reuters) – China’s Guangdong province on Friday summoned the chairman of China’s Evergrande Group (3333.HK) after the property developer said there was “no guarantee” it would have enough money to make debt payments, as regulators sought to reassure markets.

Evergrande, once China’s largest developer, is struggling with more than $300 billion in commitments, raising fears of a potential meltdown that could send shock waves through the country’s real estate sector and beyond.

On Friday, the company said in a filing to the Hong Kong Stock Exchange that it had received a request from creditors to pay about $260 million. It’s already overdue with $82.5 million in coupons due on November 6. read more

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“Given the current liquidity situation … there is no guarantee that the group will have sufficient funds to continue to perform its financial obligations,” Evergrande said, adding that creditors could demand expedited payment if they did not do so.

This prompted the government of Guangdong, where the company is based, to summon Evergrande president Hou Ka Yan.

The county government said in a statement that it would – at Evergrande’s request – send a working group to the company to oversee risk management, strengthen internal controls and maintain normal operations.

Guangdong authorities were not the only government entity involved in the Evergrande case on Friday.

In a series of apparently coordinated statements late in the evening, China’s central bank, the banking and insurance regulator and the securities regulator sought to reassure the market that any risks to the broader real estate sector could be contained.

“The problem of the Evergrande was mainly caused by mismanagement and sudden expansion,” the People’s Bank of China said.

The short-term risks posed by a single real estate company will not undermine the fundraising process in the market in the medium and long term, she said, adding that home sales, land purchases and financing are “already back to normal in China”.

The China Banking and Insurance Regulatory Commission (CBIRC) said the Evergrande case will not affect the normal operations of the industry and will increase the subsidy for guaranteed rental housing.

It added that it believed domestic and foreign regulators would handle issues related to Evergrande fairly, while the China Securities Regulatory Commission (CSRC) said any capital market repercussions were “controllable” and would continue to support the financing needs of property developers.

Evergrande said in its filing that it intends to actively engage with creditors to come up with a “viable restructuring plan” to deal with its foreign debt.

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(Beijing Newsroom Report) and (Arundhati Dutta) in Bengaluru; Additional reporting by Summit Chatterjee in Hong Kong; Written by Tom Daly. Editing by Sriraj Kalovila, Louise Heavens and Emilia Sithole Mataris

Our Standards: Thomson Reuters Trust Principles.


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