{"id":121347,"date":"2021-09-14T06:10:54","date_gmt":"2021-09-14T06:10:54","guid":{"rendered":"https:\/\/fin2me.com\/?p=121347"},"modified":"2021-09-14T06:10:54","modified_gmt":"2021-09-14T06:10:54","slug":"embattled-evergrande-warns-of-growing-default-risks-as-pressures-mount","status":"publish","type":"post","link":"https:\/\/fin2me.com\/business\/embattled-evergrande-warns-of-growing-default-risks-as-pressures-mount\/","title":{"rendered":"Embattled Evergrande warns of growing default risks as pressures mount"},"content":{"rendered":"

HONG KONG\/SHANGHAI (Reuters) -Cash-strapped property group China Evergrande Group said on Tuesday it has engaged advisers to examine its financial options and warned of default risks amid plunging property sales, sending its stock and bond prices sharply lower.<\/p>

People gather to demand repayment of loans and financial products at the Evergrande’s headquarters, in Shenzhen, Guangdong province, China September 13, 2021. REUTERS\/David Kirton<\/figcaption>

The real estate giant has been scrambling to raise funds it needs to pay lenders and suppliers, with regulators and financial markets worried that any crisis could ripple through China\u2019s banking system and potentially trigger wider social unrest.<\/p>\n

In the latest development, Evergrande said two of its subsidiaries had failed to uphold guarantee obligations for 934 million yuan ($145 million) worth of wealth management products issued by third parties.<\/p>\n

That could \u201clead to cross-default\u201d, which would \u201cwould have a material adverse effect on the group\u2019s business, prospects, financial condition and results of operations,\u201d it said in a statement to the Hong Kong stock exchange, without providing further details on the products.<\/p>\n

The company\u2019s shares slumped to a six-year low in Hong Kong on Tuesday and the Shanghai bourse halted trading of its listed bonds amid wild swings in its price.<\/p>\n

Evergrande said it has appointed Houlihan Lokey and Admiralty Harbour Capital as joint financial advisers, the clearest indication yet that it is looking at restructuring options, analysts say.<\/p>\n

The two firms will assess the group\u2019s capital structure, evaluate its liquidity, explore solutions to ease the current liquidity stress and reach an optimal solution for all stakeholders as soon as possible.<\/p>\n

\u201cEvergrande\u2019s announcement flags the first step of a restructuring, which usually involves either delay in interest payment, no interest payment or delay together with haircuts,\u201d said James Shi, distressed debt analyst at credit analytics provider Reorg.<\/p>\n

He added liquidation would only happen if the restructuring failed.<\/p>\n

Evergrande late on Monday said online speculation about bankruptcy and restructuring was \u201ctotally untrue\u201d.<\/p>\n

That came despite growing markets expectation that Evergrande may need to restructure, after China ruled in August that various lawsuits against the developer would be centrally handled in Guangzhou.<\/p>\n

Evergrande said it is talking to potential investors to sell some of its assets, but has made no \u201cmaterial progress\u201d so far.<\/p>\n

The company said earlier this month that it was in talks to sell certain assets, including stakes in Hong Kong-listed units Evergrande New Energy Vehicle and Evergrande Property Services.<\/p>\n

Pressure on Evergrande – which has 1.97 trillion yuan ($305 billion) in liabilities – has intensified in recent weeks as fears over its ability to repay investors triggered protests that are certain to rattle Beijing.<\/p>\n

The company blamed \u201congoing negative media reports\u201d for dampening investor confidence, resulting in a further decline in sales in September.<\/p>\n

WIDER IMPACT<\/h2>\n

Shares of the company fell over 10% on Tuesday morning to their lowest since December 2014. Its listed e-vehicle spinoff plunged over 23% and shares of its property management unit dropped 8%.<\/p>\n

In the debt market, Evergrande\u2019s June 2025 dollar bonds fell nearly 6 cents on Tuesday late morning to 27 cents, yielding 58.45%, according to financial data provider Duration Finance.<\/p>\n

Moves in the company\u2019s highly illiquid onshore bonds were more erratic, with one Shanghai exchange-traded bond surging nearly 23% and triggering a trading halt, while another in Shenzhen dived almost 12%.<\/p>\n

Reorg\u2019s Shi said there may be fresh bond selling if Evergrande defaults, but the market spillover would be limited because the risks have mostly been largely priced in.<\/p>\n

The bigger risks are likely to be social, he added.<\/p>\n

Angry investors gathered near Evergrande\u2019s headquarters in the southern Chinese city of Shenzhen on Monday to demand the firm repay loans and financial products.<\/p>\n

The developer\u2019s struggles to quickly sell off assets and avert defaults on its massive liabilities are raising the risk of contagion for other privately-owned developers, fund managers and analysts say.<\/p>\n

In a statement on Monday, it said it was facing \u201cunprecedented difficulties\u201d but would do everything possible to resume work and protect the legitimate rights and interests of its customers.<\/p>\n

The company\u2019s debt has been repeatedly downgraded by ratings agencies targeting the developer over its struggles to restructure huge debts.<\/p>\n

($1 = 6.4511 Chinese yuan)<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

HONG KONG\/SHANGHAI (Reuters) -Cash-strapped property group China Evergrande Group said on Tuesday it has engaged advisers to examine its financial options and warned of default […]<\/p>\n","protected":false},"author":3,"featured_media":121346,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"yoast_head":"\nEmbattled Evergrande warns of growing default risks as pressures mount - Fin2me<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fin2me.com\/business\/embattled-evergrande-warns-of-growing-default-risks-as-pressures-mount\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Embattled Evergrande warns of growing default risks as pressures mount - Fin2me\" \/>\n<meta property=\"og:description\" content=\"HONG KONG\/SHANGHAI (Reuters) -Cash-strapped property group China Evergrande Group said on Tuesday it has engaged advisers to examine its financial options and warned of default [...]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/fin2me.com\/business\/embattled-evergrande-warns-of-growing-default-risks-as-pressures-mount\/\" \/>\n<meta property=\"og:site_name\" content=\"Fin2me\" \/>\n<meta property=\"article:published_time\" content=\"2021-09-14T06:10:54+00:00\" \/>\n<meta name=\"author\" content=\"Mark\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/fin2me.com\/wp-content\/uploads\/2021\/09\/Embattled-Evergrande-warns-of-growing-default-risks-as-pressures-mount.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Mark\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/fin2me.com\/business\/embattled-evergrande-warns-of-growing-default-risks-as-pressures-mount\/\",\"url\":\"https:\/\/fin2me.com\/business\/embattled-evergrande-warns-of-growing-default-risks-as-pressures-mount\/\",\"name\":\"Embattled Evergrande warns of growing default risks as pressures mount - 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