Go back to the markets the nightmare Evergrande. The Chinese real estate giant with 300 billion dollars of debt has sold 13,78% of its value to Hong Jong, reaching its lowest level in eleven years.
The sales rain was triggered by the note released on Friday, with which the company communicated its intention to “actively work” with creditors offshore on a restructuring plan, adding however that “there is no guarantee that the group will have sufficient funds to continue to meet its financial obligations”. The real estate developer has received a request to fulfill its obligations under a guarantee in the amount of approximately $260 million. As revealed by Bloomberg, the company has yet to repay 82,5 million dollars and may not be able to.
After the release of the note, the president and founder of Evergrande, Hui Ka Yan, was summoned by the Guangdong government which agreed, at the company's request, to send a working group to supervise risk management. Separately, Evergrande said it was exploring various solutions, "including, but not limited to, loan renewals and extensions and asset disposals."
Evergrande continues to pay for the new policies put in place by the Chinese president, Xi Jinping, to put a brake on speculation and real estate borrowing, both of which have reached very high levels. The company, one of the largest in the Chinese real estate sector, has long been under observation, because its possible bankruptcy could inflict a serious blow on the Chinese economy. Evergrande has avoided default several times, making last-minute interest payments to bondholders, and is now trying to offload some assets to shore up the accounts. In mid-November, President Hui Ka Yan had sold for $1,1 billion of shares, by cutting his stake sharply, in order to finance the group's debt.
It should be noted that Evergrande is not the only company in the sector to travel in troubled waters. This morning, Sunshine 100, a Chinese real estate company, warned it was "unable" to repay a loan. In a statement sent to the Hong Kong Stock Exchange, Sunshine 100 said it could not honor a $170 million (€150,6 million) repayment and related interest due the day before.
