The billionaire owner of the ailing Evergrande has landed in hot water with the authorities, while a new Chinese developer has also defaulted on millions.
The billionaire owner of the struggling Evergrande was called out by the relevant authorities after the developer announced there was “no guarantee” that it could pay off its massive debt.
The Chinese wealth juggernaut has been on the verge of collapse for months after a staggering $420 billion in debt was repaid.
On Friday, it disclosed through a filing to the Hong Kong Stock Exchange that creditors had issued a demand for payment of a $260 million loan.
The company is already overdue on $82.5 million in coupons it originally had at the beginning of last month, with a 30-day grace period on that figure now expiring within hours.
‘No guarantee’ Evergrande could pay off
Evergrande’s latest developments have rattled insiders after weeks of relative calm, with the company not mincing its words when it came to how dire the situation had become.
“In light of the current liquidity situation … there is no guarantee that the Group will have sufficient funds to meet its financial obligations,” Evergrande said in the note.
According to Reuters, that revelation prompted the government of Guangdong province, in which Evergrande is headquartered, to summon its billionaire boss Hui Ka Yan to express concern over the news.
Reuters Reports that the government has confirmed that a group will be sent to the company to “oversee risk management, strengthen internal controls and maintain normal operations”.
And late Friday, China’s central bank, the banking and insurance regulator, and its securities regulator followed suit, issuing a string of sober statements claiming the crisis facing Evergrande.
“Evergrande’s problem was primarily due to its own mismanagement and breakneck expansion,” the People’s Bank of China said in a statement.
“Short-term risks posed by a single real estate firm will not undermine market fundraising in the medium and long term.”
“The impact of group risk events on the stable operation of capital markets is controllable,” the China Securities Regulatory Commission said.
Meanwhile, Evergrande vowed to work with creditors to develop a “viable restructuring plan” for managing the debt.
This happened after Hui Ka Yan was first requested to dive into his vast personal wealth to keep the company afloat, with Evergrande desperately trying to sell assets to raise much-needed cash.
New asset giant in trouble
However, despite assurances from Chinese regulators that there are growing signs of a dangerous “transition” already in full swing, the face of Evergrande is already spreading across the asset sector.
In October, fellow Chinese real estate developer Fantasia missed payments on a US206 million ($A282 million) bond that had matured a day earlier, triggering a default, while another firm, Cynic Holdings, also That month the loan defaulted on interest repayment.
On Friday, Casa Group Holdings Ltd. warned that it may not pay off its $571 million bond due next week.
And now, it looks like another property giant is in trouble, with developer Sunshine 100 China Holdings Ltd defaulting on $179 million of debt and interest payments on Sunday.
In a filing, the company said it would not be able to pay more than $170 million of principal and $8.9 million of interest on notes due this year.
“The crisis is spreading among Chinese real estate firms, amid a debt crisis in the giant China Evergrande Group that is intensifying,” of bloomberg Will Mathis and Tiago Ramos Alfaro wrote behind the latest development.
“Broad sector tensions have pushed yields on Chinese junk dollar bonds – many of which come from industry – near record highs.
“This has made it difficult for distressed developers to refinance their matured debt in the offshore market, which has contributed to the wave of defaults.”