Financially troubled Chinese property developer, China Evergrande Group is on the brink of default again, raising expectations of direct state involvement and a managed debt restructuring.
The company having made three 11th-hour coupon payments in the past two months is expected to face the end of a 30-day grace period on Monday, with dues this time at $82.5 million.
According to reports, the property developer’s one of two bonds that could go into default on non-payment on Monday, which is its November 2022 bond, was trading at price of 20.787 U.S. cents on the dollar, in comparison to 20.083 cents at the end of Friday.
On Monday, after it mentioned that there was no guarantee it would have enough funds to meet debt repayments the shares plunged 12% to an 11-year low after mentioning. Thus prompting Chinese authorities to summon the company’s chairman.
Evergrande, once China’s top-selling developer, is under more than $300 billion in liabilities. And its collapse could send repercussions through the country’s property sector and beyond.
At present, Evergrande is the world’s most indebted developer, and in a filing late on Friday, it said to have had received a demand from creditors to pay about $260 million.
According to reports, such events prompted the government of Guangdong province, where the company is based, to summon the comapny’s Chairman Hui Ka Yan. While it also mentioned that it would send a working group to the developer at its request to oversee risk management, maintain normal operations and strengthen internal controls.
China’s central bank, banking and insurance regulator and its securities regulator late in the evening in a series of apparently coordinated statements, sought to reassure the market that any risks to the broader property sector could be contained.
The People’s Bank of China mentioned that short-term risks will however, not undermine market fundraising in the medium and long term that has been caused by a single real estate firm. It also added that the land purchases, housing sales, and financing is returning to normal state in China.
The company’s share on Monday fell more than 12% to HK$1.98, its lowest since May 2010.