Evergrande is set for restructuring and nothing is said about the first official default

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Apartment house by Chinese real estate developer Evergrande in Beijing.

Noel Celis | AFP | Getty Images

Evergrande Analysts say they plan to move towards debt restructuring, including all offshore government bonds and private debt.

A troubled real estate developer, overwhelmed by $ 300 billion in debt, said Tuesday that it would set up a risk management committee to help mitigate and eliminate future risks for the company. The world’s most indebted real estate developers struggle to raise money to pay their suppliers and investors.

With these developments, the market share has risen from a record low. They later lost steam, but it bounced off Tuesday.. Stocks of other Hong Kong-listed real estate companies also skyrocketed.

China’s support for easing is also boosting sentiment. On Monday, the central bank of the country announced that it would reduce the reserve requirement ratio for the second time this year, or the amount of cash that banks must hold as reserves. This will free 1.2 trillion yuan ($ 287 billion) and help slow growth in the pandemic.

“It seems very likely that Evergrande’s offshore debt and private debt will be restructured soon.” Martin Henecke, Asia Investment Adviser and Head of Communications at St. James’s Place, told CNBC on Tuesday.

According to Luther Chai of CreditSights, a subsidiary of Fitch Ratings, these private debts could include bonds between the joint venture Jumbo Fortune and the unit Scenery Journey.

The developers hadn’t said anything about whether they paid $ 82.5 million worth of interest. The 30-day grace period ended on Monday. However, analysts said interest was unlikely to be paid given the company’s restructuring plans. “We plan to actively engage with offshore creditors to develop a viable restructuring plan,” Evergrande said on Friday.

This is the first time the company has officially defaulted, as it was able to make the last few interest payments in the 11th hour of the grace period.

China shifts to policy easing

Analysts said China’s transition to monetary easing is noteworthy in improving the situation in the troubled real estate market.

“It’s very noteworthy … In my view, China’s policymakers’ rhetoric has changed significantly in recent years, with lower reserve requirements, increased restraint in the real estate sector, stable in 2022, and more. Focus on financial support through various monetary policy tools. “ Henecke.

Read more about China from CNBC Pro

Evergrande is set for restructuring and nothing is said about the first official default

Source link Evergrande is set for restructuring and nothing is said about the first official default

The post Evergrande is set for restructuring and nothing is said about the first official default appeared first on Eminetra.

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