Chinese markets return from break to more Evergrande angst

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There is barely any fresh insight available as to how regulators propose to curb the contagion by selling off debt problems or units of cash-strapped China Evergrande Group

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China’s markets return on Friday after a seven-day break with barely any fresh insight into how regulators are handling cash-starved China Evergrande Group’s debt problems or even the firm’s own bid to sell its units. Plans have been proposed to prevent infection.

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Evergrande is facing one of the biggest defaults the country has ever faced as it wrestles with more than $300 billion in debt.

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The company missed coupon payments on two dollar bond installments last month. The potential collapse of one of China’s biggest lenders has raised concerns about contagion risks for the property sector in the world’s second-largest economy, as its debt-laden peers defaulted with a downgraded rating. Is.

Vacant buildings in China’s provincial cities testify to evergreen debacle

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Bloomberg reported Thursday that some dollar bondholders were invited by advisors for a call Friday at 0630 EST (1030 GMT) to discuss strategy and how to grow the group.

A group of bondholders had previously selected investment bank Moelis & Co and law firm Kirkland & Ellis as advisors on a possible restructuring of a tranche of bonds, two sources familiar with the matter said in September.

Chinese regulators have not commented on Evergrande specifically during the week-long holiday from October 1, although the central bank last Wednesday urged financial institutions to cooperate with relevant departments and local governments to ensure a “stable and healthy “To sustain the development. Protecting the interests of the property market and housing consumers.

Investors have been waiting to hear from the company since requesting a halt to trading of its shares in Hong Kong on Monday, pending an announcement about a major transaction. Evergrande Property Services Group, a spin-off listed last year, also requested a halt, saying it was “a potential general offering for the company’s shares”.

While the sale of assets will temporarily ease concerns about Evergrande’s cash flow, analysts also believe that Evergrande and some other Chinese property firms have huge indebtedness that cannot be resolved quickly. .

An index of China’s high-yield debt, which is dominated by developer issuers, has been slipping during the week and is down more than 21% since May. It could soon see its widest spread ever.

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The troubles in the property sector increased during the Golden Week break. Two Hong Kong property agencies said they are suing Evergrande over unpaid commissions, while bonds from other property firms such as Cassa Group, Central China Real Estate and Greenland were hit by the uncertainty.

Still, sentiment improved slightly on Thursday with US-traded Chinese shares Alibaba Group Holding and Tencent Holdings each rising nearly 8% as concerns about US-China trade ties and Evergrande’s debt crisis appeared to ease. Gave.


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