Chairman of Evergrande was summoned by officials after debt warning

Evergrande chairman Xu Jiayan was summoned by Chinese government officials on Friday after the real estate developer warned that it might not be able to meet its financial obligations and plans to restructure its offshore debt.

Decision of Guangdong officials in the southern province Evergrande It is the headquarters, and the request to convene the meeting was held a few hours after the real estate group also disclosed that it had received a request related to the US$260 million guarantee, but did not provide any further details.

In a series of developments, the local government of Guangdong agreed to drop a group of officials to this heavily indebted company because of the Beijing tightens restrictions About the country’s once booming real estate industry.

The provincial government did not provide any further information about what the team will do.

In a document submitted to the Hong Kong Stock Exchange on Friday, Evergrande stated that it “cannot guarantee that the group will have sufficient funds to continue to perform its financial obligations”.

Soon after filing, the People’s Bank of China intensified its criticism of the company, accusing it of “mismanagement” and “blind expansion.”

The central bank insists that Evergrande’s predicament will not affect broader market stability. China’s securities market regulator, the China Securities Regulatory Commission, also told reporters that the risks from developers are controllable.

However, Evergrande’s borrowing scale—the group’s liabilities exceed US$300 billion—has caused a liquidity crisis across the industry, sweeping rival developers such as Kaisa. Evergrande’s huge role in China’s real estate industry also makes global investors pay attention to its fate.

Craig Bosham, chief China economist at Pantheon Macroeconomics, an economic research consulting firm, said: “The People’s Bank of China tried to ease market tensions and attributed Evergrande’s failure to its management, rather than any systemic risks. But the guarantee that this will not affect the financing of the real estate sector is hollow.”

Although Evergrande missed interest payments several times With regard to offshore bonds, it did not officially default because it fulfilled its obligations before the end of the 30-day grace period.

In the Hong Kong document, the company stated that it “plans to actively engage with overseas creditors to formulate a viable overseas debt restructuring plan for the company.”

The consultants of Evergrande International Bondholders had previously complained that “Meaningful Participation” From the company.

The central bank said in its statement that foreign bond investors are “mature” and stated that “there are legal regulations and procedures for dealing with related issues.”

Botham pointed out that bailing out US dollar bondholders is “unlikely.” “Resources will be concentrated on domestic stakeholders; home buyers, local banks and related companies,” he said.

Additional reporting by Emma Zhou (Beijing), Sun Yu (Shanghai) and Tom Mitchell (Singapore)

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