For the first time, Evergrande has failed to repay its creditors, said the Bloomberg agency on Tuesday, when the Chinese state invites itself at the head of the ultra-indebted real estate developer to avoid bankruptcy.
Private heavyweight in the sector in China, Evergrande is crumbling under around 260 billion euros in debt.
The group has struggled for several months to honor its interest payments and deliveries of apartments. On November 6, he should have paid a reimbursement of 82.5 million dollars (73.1 million euros).
Evergrande had a grace period of an additional month to get into good standing. The deadline ended at midday on Tuesday (Beijing time). According to Bloomberg, several foreign creditors have still not been paid. This would make it Evergrande’s first default which at this point has not commented.
As early as September, the group failed to meet several deadlines and suspended its listing on the Hong Kong Stock Exchange. But Evergrande had managed to repay his creditors before the grace period expired.
– “Risk management” –
Sure of its financial strength, Evergrande had invested in recent years in a multitude of sectors (tourism, digital, health insurance or electric car), which partly explains its abysmal debt.
But the Chinese authorities, worried about the swelling of the debt in the real estate sector, last year imposed prudential ratios on developers to reduce their recourse to borrowing. This regulatory tightening marked the beginning of financial worries for Evergrande.
In September, the firm admitted for the first time that it might not be able to honor all of its commitments. And rare in China, dozens of injured owners, not having received delivery of their apartment, had demonstrated for several days in front of the group’s headquarters in Shenzhen (south).
Monday evening, the promoter announced the creation of a “risk management committee” which will include five heads of public companies, and therefore indirectly the state.
This group has a total of seven members. Its mission will be to “reduce and eliminate future risks” for the promoter, whose possible bankruptcy would be the biggest ever recorded for a Chinese company.
So far, the Communist authorities have not indicated whether or not they intend to fly to the aid of the private group. But he is ready to play a leading role in stemming the crisis, note several analysts contacted by AFP.
– “Take over” –
The measure seems for the moment to reassure the markets: the title Evergrande gained Tuesday 1% on the Hong Kong place, after a decline of 14% the day before.
Investors also took note of the “support” for the real estate sector proclaimed Monday by the government after a meeting chaired by number one Xi Jinping.
Three days earlier, Evergrande had again warned that he might not be able to meet his financial obligations.
The intervention of the power marks “the official beginning of the restructuring of the debt of Evergrande”, wants to believe the analyst Lu Ting, of the bank of investment Nomura.
On Friday, authorities in Guangdong province, where Evergrande is headquartered, announced that they would send a task force to its head “to oversee the company’s risk management.”
This is akin to “a potential takeover of Evergrande” by the public authorities, believe analysts at the firm Jefferies.
The poor health of Evergrande is only one of the symptoms of a seized real estate sector, with several developers in a delicate financial situation.
Kaisa, one of the most indebted companies in the industry, was due on Tuesday in a repayment of $ 400 million owed on loan interest. Only 27th Chinese promoter in terms of turnover, Kaisa warned last week that he was at risk of default.