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Latest news and analysis about the China Evergrande Group, the world’s most indebted property developer. Fears are rising about Evergrande’s ability to repay its cascading pile of debt against the backdrop of muted property sales in mainland China and efforts by Beijing to rein in the property sector in the past year.
China Evergrande chairman Hui Ka Yan, now under criminal investigation, is a symptom of a system that is no longer delivering results for average families, raising questions about the path forward.
China’s decision makers remain confident they can still turn things around in the longer term. A stable way forward is better than resorting to a ‘shock-and-awe’ option with its uncertain fallout.
- Major banks may need to set aside US$89 billion next year for bad real estate debt, dooming them to profits in the low single digits at best, analysts say
- Lenders are now weighing lower growth targets and job cuts among possible options, bankers say
Police in Beijing have imposed ‘criminal compulsory measures’ against several suspects at Zhongzhi Enterprise Group, after the shadow bank reported an asset shortfall of US$36 billion earlier this week.
If China allows lenders to issue loans to some developers, it ‘would be negative for banks as it would raise concerns about national service risk and credit risk in the medium term’, JPMorgan analysts say.
Banks have been given some wriggle room to choose who they lend their money to and are likely to prefer larger, state-owned developers, rather than their cash-strapped, privately owned peers, analysts said.
Zhongzhi Enterprise Group, one of mainland China’s largest shadow banks, has warned investors of an asset shortfall, setting off alarm bells in the trust sector which invests a large portion of investors’ money in real estate projects.
The seizure of the two properties on Black’s Link, The Peak, is another setback for the founder of China Evergrande, which faces a winding-up hearing in Hong Kong on December 4.
Tycoon Joseph Lau calls press conference to deny he had written wife out of his will and left everything to oldest son.
The indebted developer on Friday reported that October sales remained near a punishing low established in September amid a collapse of buyer confidence. Meanwhile, developer Nan Hai is forced to delist in Hong Kong.
The property magnate and Chinese Estates founder says high interest rates are forcing businesspeople to recalculate their investments and potential returns. ‘It’s better to hold on to the money now.’
Ping An Insurance denies report that it has been asked by Beijing to take over Country Garden and assume the distressed developer’s debts, and confirmed it holds no shares in the company.
China’s property industry, now suffering a solvency crisis as developers struggle to stay afloat, cannot play its former role as an economic “pillar”. Can other industries step up and take its place?
Evergrande has proposed a new debt revamp plan for offshore bondholders, offering to swap their debts into about a 30 per cent equity stake in each of its two Hong Kong-listed subsidiaries, two sources say.
The spin-off of shopping centres that are run by Chinese developers will offer an alternative source for these builders to raise money from capital markets and manage their leverage, the ratings agency said.
China Evergrande has been given a final reprieve to get its house in order, after a Hong Kong judge adjourned a winding-up hearing against the developer to December 4.
Chinese developer Country Garden Holdings was deemed to be in default on a dollar bond for the first time ever, and the company is now likely headed for what would be one of the nation’s biggest-ever restructurings.
The positive impact of mainland China’s property stimulus measures is likely to be short-lived, with home sales remaining sluggish for at least the next six months, according to the credit ratings agency.
Debt problems that have manifested in Evergrande and Country Garden cases are prompting China’s central bank to step up risk-monitoring of lenders and local government financing vehicles.
Municipalities have been directed to drop a 15 per cent price premium on land sales, which fell 80 per cent in 2022 and 33 per cent this year. The impact on demand ‘might be quite limited’, an analyst says.
Evergrande’s future is up in the air, with founder Hui Ka-yan under arrest for suspected crimes. Still, the developer may survive a foreclosure attempt later this month, a restructuring lawyer at Hogan Lovells says.
Embattled property developer Country Garden has issued a statement rejecting talk, which it said was spread across several social media platforms, that its founder and chairman had both left China.
The troubled Chinese developer is fighting to avert its first ever actual default on an offshore debt as the grace period for a US$15.4 million payment enters its final hours.
Two former Goldman Sachs traders in Hong Kong are raising money to lend to financially strapped borrowers, including the growing number of down-on-their-luck Chinese property tycoons.
Standing Committee of China national legislature will meet on Friday to discuss a bill to approve front-loading the 2024 bond allocation as provincial and municipal authorities struggle to raise funds.
The Central Finance Commission has set up offices and begun day-to-day work, part of China’s efforts to guarantee stability in a financial system that is feeling some tremors.
Yeung Kwok-keung’s visit to a Guangdong construction site comes as the sector’s embattled companies and their billionaire bosses strive to show their dedication to delivering housing and clearing debts amid what is seen as heightened government scrutiny.
China is striving to establish a high-quality inclusive financial system over the next five years, although its financial stability is under pressure from the ongoing property crisis triggered by Evergrande and Country Garden.
