Consequences of the Evergrande crisis

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The real estate sector comprises 20% of China’s GDP.

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SINGAPORE/SHANGHAI: China Evergrande inched closer on Friday to the potential default that investors fear, missing a payment deadline in one of the clearest indications yet that the developer whose debt struggles have spooked markets is in dire trouble.

The company owes $305 billion, has run short of cash and investors are worried a collapse could pose systemic risks to China’s financial system and reverberate around the world.

A deadline for paying $83.5 million in bond interest passed without remark from Evergrande and bondholders had not been paid nor heard from the company, two people familiar with the situation told Reuters.

The firm is now in uncharted waters and enters a 30-day grace period. It will default if that passes without payment.

https://economictimes.indiatimes.com/markets/stocks/news/fears-grow-for-china-evergrande-after-interest-deadline-missed/articleshow/86475598.cms

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Beijing tightens oversight of Evergrande accounts

Completion of projects takes priority over paying creditors, says housing ministry

published : 24 Sep 2021 at 19:02

writer: Bloomberg News

BEIJING: China’s housing ministry has stepped up oversight of embattled China Evergrande Group’s bank accounts to ensure that funds are used to complete housing projects and not diverted to pay creditors.

The Ministry of Housing and Urban-Rural Development instructed its local offices across China last month to supervise the funds for Evergrande property projects in special escrow accounts, according to people familiar with the plan who declined to be identified. Evergrande and the ministry did not immediately respond to requests for comment. 

Under the heightened oversight, the developer’s funds must first be used for construction to ensure project delivery, the people said. Cash payments from these government-supervised accounts, such as paying suppliers, will be subject to state approval, they said. Local bureaus in some cities have already started to implement the measures, the people said. 

The moves are another sign that homeowners come first on Beijing’s priority list for managing the Evergrande crisis even as bondholders, banks and other creditors seek repayments on more than $300 billion in liabilities from the world’s most indebted developer.

The cash-strapped company has kept bond investors on edge by not making any announcement on whether it met a Thursday deadline to make an $83.5-million coupon payment on a bond maturing in March. It said on Wednesday that it had reached a deal with some local creditors to avoid a default but gave few details.

Asia’s largest issuer of junk-rated dollar bonds has so far made no stock exchange filing or public comment about the coupon. Three holders of the notes told Bloomberg on Friday that they had not received payment. 

https://www.bangkokpost.com/business/2187231

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Chan Hoi Wan, wife of billionaire Joseph Lau, sells US$11.2 million of Evergrande shares.

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