Chairman Cuts Stake; Developer Shares Slide: Evergrande Update

(Bloomberg) -- China Evergrande Group’s bondholders may soon be short another $255 million as the embattled developer focuses on delivering homes and paying workers instead.

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Coupons on two dollar notes are due Tuesday, both with a 30-day grace period before a default can be declared. The developer was labeled a defaulter by international ratings firms for the first time earlier this month after it failed to repay liabilities on time.

People’s Bank of China Governor Yi Gang said in an interview carried by the official Xinhua News Agency that China’s financial system is stable overall, while market expectations on certain property companies he didn’t name are improving.

Meanwhile, Evergrande’s shares, which lost most of their value this year, rose as much as 10% as markets reopened Tuesday following a public holiday in Hong Kong. Evergrande Chairman Hui Ka Yan on Sunday pledged to meet the goal of delivering thousands of apartment units at 115 projects this month. The company also said it resumed construction at most of its property projects.

Key Developments:

  • Evergrande Faces First Big Post-Default Dollar Bond Coupon Test

  • Evergrande Races to Restart Projects as Debt Repayments Loom

  • Yango’s Parent Is Newest China Defaulter as Property Woes Deepen

  • Evergrande Vows to Ensure Delivery of 39,000 Apartments in Dec.

  • China’s Central Bank Vows Greater Support for Real Economy

  • Trickle of China Developer Bond Sales Shows Selective Demand

Minsheng Says Evergrande Added Collaterals (5:18 p.m. HK)

Evergrande has offered additional collaterals and guarantees for some outstanding loans from China Minsheng Banking Corp., the lender said in response to investor inquiries on a platform run by Shanghai stock exchange.

The collaterals include property project companies’ stakes. Minsheng said all loans to Evergrande are for residential property projects and the lender is not involved in any hidden liabilities or off-balance sheet financing of the developer.

PBOC Governor Reassures on Financial Risks (3:55 p.m. HK)

PBOC Governor Yi Gang said China’s financial system is stable overall with controllable risks, according to an interview carried by Xinhua.

Market expectations on certain property companies are gradually improving, Yi said, without naming any developers. PBOC will follow market-oriented and law-based principles to deal with risks in the market economy, he told Xinhua.

Logan to Raise Asset-Backed Funds (12:14 p.m. HK)

Logan Group Co. said said a wholly-owned subsidiary plans to raise 665 million yuan ($104 million) through an asset-backed special program that starts Tuesday, according to a stock exchange filing.

Zhenro Offshore Loans (10:13 a.m. HK)

Zhenro Properties Group Ltd. received funding from two unidentified offshore commercial banks, according to an emailed statement. The loans -- amounting to HK$550 million ($70.5 million) -- will be used to refinance the developer’s existing debt. The new loans “appears to signal it retains offshore funding access while other China developers may have lost it,” wrote Bloomberg Intelligence credit analyst Daniel Fan.

Central Bank Injects Funds (9:20 a.m. HK)

The People’s Bank of China added a net 190 billion yuan in short-term funding to the financial system on Tuesday. The money market operation was aimed at keeping liquidity stable into the year’s end.

Liquidity released from marginal easing in monetary policy next year will be mainly channeled to key areas such as small businesses, according to a Shanghai Securities News report that cited analysts.

Dollar Bond Coupon Due (5 a.m. HK)

Evergrande will face an initial interest payment deadline for two dollar bonds Tuesday. The firm has a $50.4 million coupon due on a 7.5% 2023 bond and another $204.8 million tied to a 8.75% 2025 note, according to Bloomberg-compiled data.

Yango Shareholder Cuts Stake (10:32 p.m. HK)

Taikang Life Insurance and Taikang Pension agreed to sell a combined 7.41% stake in Yango Group Co., according to a filing to the Shenzhen Stock Exchange. After the transactions, Taikang Life Insurance holds a 3.99% stake in Yango while Taikang Pension no longer holds any shares.

The parent of Yango Group recently became the latest victim of China’s crackdown on the nation’s indebted property sector, defaulting on a dollar bond after missing an interest payment.

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