By John Meyer, business consultant – Eurasia Business News, September 24, 2021
China has called on local authorities to prepare for a possible bankruptcy of Chinese real estate giant China Evergrande Group, the Wall Street Journal reported on September 23, citing officials familiar with the matter.
This approach was presented by the authorities as aiming “to be prepared for a possible storm“, specifies the article.
Evergrande, heavily indebted, was due to pay interest on September 23 in the amount of $ 83.5 million on a bond loan denominated in US dollars that’s set to mature in March 2022. The real estate developer passed this deadline. If the Chinese property developer has now a grace period of up to 30 days to pay these $ 83.5 million, it is also supposed to honor interest on another dollar bond in the amount of $ 47.5 million next week.
Both bonds will be in default if Evergrande does not pay the interest within 30 days of the scheduled payment dates.
Read also : Chinese Evergrande misses loan payments to two banks
With $305 billion in liabilities, China Evergrande is struggling to pay interests and global markets are fearing a default of one of the largest Chinese real estate developers. The company’s shares in Hong Kong hit lowest level since 2010.
According to the Wall Street Journal, Chinese local authorities have been instructed to prepare to resume projects and to set up teams responsible for enforcing public order in the event of protests, the newspaper added.
For its part, Bloomberg reported Thursday, citing a source familiar with the matter, that Chinese authorities had asked Evergrande to avoid a short-term default on its dollar bonds, calling on it to actively communicate with its creditors.
On September 14, the Evergrande Group announced on the Hong Kong Stock Exchange that two of its subsidiaries had defaulted on their 934 million yuan (about $ 145 million) wealth management product warranties.
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