Table of Contents
As the crisis at the troubled real estate developer has gotten worse, shares of China’s Evergrande have plummeted.
It announced on Monday that its mainland subsidiary Hengda Real Estate had fallen behind on 4 billion yuan ($547 million) in debt.
Authorities have reportedly detained a number of current and former executives, according to Beijing-based news site Caixin.
Xia Haijun, a former chief executive, and Pan Darong, a former finance head, were among those detained, according to Caixin.
The Caixin report has not been independently verified by the BBC. A request for comment from the BBC was not immediately answered.
Following an even more drastic loss the day before, its share price fell on Tuesday. This week, Evergrande’s stock price has decreased by more than 25%.
As part of its restructuring plan, Evergrande stated it was unable to sell fresh debt because Hengda was under investigation by the authorities in a statement to the Hong Kong Stock Exchange on Sunday.
Earlier this month, police in Shenzhen, southern China, detained employees of Evergrande’s wealth management division.
Police urged the public to report any suspected fraud incidents in a social media post.
Authorities had previously said that a newly established state-owned insurer will take over Evergrande’s insurance division.
“The latest news will probably make it more difficult for Evergrande to carry out its restructuring,” REDD Intelligence Asia’s Eveline Danubrata told the BBC.
Additionally, Evergrande must appear in court in Hong Kong to defend against a winding-up petition that may push company into liquidation. The hearing, which was originally slated for July, will now take place on October 30.
“Creditors may think twice about approving a restructuring proposal that includes a repayment plan over a long period of time if they’re concerned about the company’s ability to survive,” Ms. Danubrata said.
which owes more than $300 billion (£246 billion) in debt, has been at the epicenter of China’s real estate debt crisis. Over the previous year, several significant developers have declared bankruptcy.
The majority of Evergrande’s debt is owing to Chinese residents, many of whom are regular individuals whose homes are still under construction.
The corporation has considerable freedom to renegotiate the length of time it has to make the repayments notwithstanding the size of these onshore obligations.
The $31 billion due to creditors outside of China who purchased bonds from Evergrande is a major issue for its survival.
Evergrande has been working on a new repayment strategy since going into default on its obligations two years ago.
After seeking US bankruptcy protection in August, the company appeared to be making progress toward finding a solution.
The company’s most recent strategy called for it to reissue its foreign debt as new bonds that it would have to repay in around 10 years while also giving its creditors stock in the business.
Its most recent issues, however, have seriously cast doubt on its turnaround strategy.
china evergrande group debt
An enormous load is causing China Evergrande Group debt, a Chinese real estate developer, to struggle. The corporation owes more money than other nations owe, totaling more than $300 billion. Concerns over the stability of the Chinese economy and the international financial system have been raised as a result of the debt issue.
The Chinese government started tightening rules on the real estate market in 2021, which is when Evergrande’s debt issues first surfaced. Evergrande found it more challenging to sell its real estate and borrow money as a result. As a result, the business started missing debt payments.
The Chinese economy has been significantly impacted by the debt issue. The crisis has caused a drop in investment and property values. A number of smaller developers have also stopped paying their bills as a result of it.
The situation is being managed by the Chinese government. Some of creditors have received financial assistance from the government, and the government has also assisted the company in selling some of its assets. Nevertheless, it is uncertain if the government’s actions will be sufficient to stop from going into default on its debt.
The debt crisis at Evergrande is a complicated problem with wide-ranging effects. Both the Chinese economy and the global financial system could suffer from the crisis. It is crucial to keep a careful eye on the situation and to be ready for a range of potential outcomes.