29.6 C
Thursday, April 25, 2024

China Evergrande braces for payment deadline after doubting availability of funds

HONG KONG: China Evergrande Group shares fell by 12% to 11 years on Monday after the company said it was unsure if it would have enough money to pay off debts, prompting Chinese authorities to call its chairman.

Shares are down as a 30-day grace period for a US $ 82.5 million coupon due in November. 6 will end on Monday.

Evergrande, a former Chinese best-selling engineer, faces more than US $ 300 billion in debt. The collapse may cause shock to the real estate industry and beyond.

In a statement issued late Friday, Evergrande, the world’s largest debtor, also said it had received a request from creditors to pay an estimated US $ 260 million.

That prompted the Guangdong provincial government, where the company is based, to summon Evergrande chairman Hui Ka Yan, and later said in a statement he would send a working group to the developer with Evergrande’s request to oversee risk management, strengthen internal controls and maintain normal operations.

In a series of seemingly formal statements this evening, the central bank of China, the banking and insurance regulator and their security regulator sought to reassure the market that any risks in the broader real estate sector could collapse.

The short-term risks posed by a single real estate company will not undermine market capitalization in the medium to long term, the People’s Bank of China said, adding that real estate, land acquisition and financing “have returned to normal in China”.

Evergraned’s stock fell more than 12per cent to HKUS$1.98, its lowest since May 2010.

Most Popular Articles