Recent comments by developers have raised expectations of the state’s direct involvement and management of debt restructuring.
China Evergrande Group is once again on the brink of default, and the pessimistic comments of real estate developers have triggered expectations for direct government involvement and managed debt restructuring.
Evergrande has paid the 11th hour coupon three times in the past two months, and will face the end of the 30-day grace period again on Monday, this time with a membership fee of 82.5 million US dollars.
But a statement late on Friday stated that creditors were demanding $260 million and there was no guarantee that there would be sufficient funds to repay the coupon, which prompted the authorities to summon its chairman-and shrink the market value of its stock on Monday. one eighth.
Evergrande used to be China’s best-selling developer, but is now struggling to cope with more than 300 billion U.S. dollars in debt, which means that the collapse may spread throughout China Real estate industry Beyond.
After issuing the statement on Friday, the authorities of Guangdong province where the company is located said in a statement that they will send a working group to Evergrande at the request of the developer to oversee risk management, strengthen internal control and maintain operations.
The central bank, banking and insurance regulators, and securities regulators also issued statements stating that the risks faced by the broader real estate industry can be controlled.
The People’s Bank of China stated that in the medium and long term, the short-term risks of a single real estate company will not destroy market funds. It said that house sales, land purchases and financing “have returned to normal in China.”
Analysts said that the concerted efforts of the authorities indicate that Evergrande may have entered the process of managing debt asset restructuring to reduce systemic risks.
Morgan Stanley stated in a report that this process will involve coordination between authorities to maintain the normal operation of real estate projects, and negotiations with domestic creditors to ensure project development and completed financing.
The US investment bank said that after business operations begin to stabilize, regulators may also promote debt restructuring discussions with overseas creditors.
Evergrande’s November 2022 bond-one of two bonds that may default on Monday due to non-payment-traded at 20.787 cents per dollar on Monday, compared to 20.083 cents at the end of Friday.