Chinese real estate group Evergrande has announced it will sell its $1.5 billion stake in Shengjing Bank to a state-owned asset management company.
|It is estimated that Evergrande’s debts exceed $300 billion. Photo: Reuters|
This move was made by Evergrande ahead of the periodic bond interest payment on September 29.
Once the leading wing of the Chinese real estate industry, Evergrande is now heavily indebted to more than 300 billion USD and is one of the most indebted property developers in the world, of which the debts of Evergrande mainly from banks and suppliers.
Evergrande is collecting money to pay off debts, including periodic interest $47.5 million payable on September 29 for bonds previously issued by the business.
In a document filed on the Hong Kong Stock Exchange on the morning of September 29, Evergrande said that the group had reached an agreement to sell 1.75 million shares that this business owns at Shengjing Bank to the Management Group. state-owned property Shenyang Shengjing for 5.7 yuan/share. The number of shares that Evergrande sold this time accounted for 19.93% of the charter capital at Shengjing Bank.
Before, Evergrande sold 1 billion yuan worth of Shengjing Bank shares.
In this announcement, Evergrande admitted its liquidity problems had adversely affected Shengjing Bank. This real estate enterprise hopes that after selling capital to Shenyang Shengjing, this group will help stabilize the operation of Shengjing Bank.
After the above information on divestment, Evergrande shares gained nearly 10% in this morning’s trading session.
Evergrande’s crisis intensified in September when the group twice warned it could default. Fears that China’s top real estate company will “break its wings” have enveloped the global stock market in the past week.
Worth mentioning, Evergrande’s “debt bomb” has so far remained silent before the periodic interest payment worth $83.5 million on September 23 to Evergrande bondholders in US dollars.
Technically, however, Evergrande would only default if it failed to make periodic interest payments on the bond within 30 days of the maturity date.
Both investors and financial analysts are closely watching Evergrande’s move because they believe that the collapse of this group not only affects the Chinese real estate industry but also causes a “domino effect”. broken into other markets outside of China.
All eyes are on how Evergrande will handle the interest due on September 29 for the $1 billion bond. From now until the end of 2021, Evergrande will have to make periodic interest payments in October, November, and December.
Analysts observe that Evergrande is giving more priority to domestic investors – who hold yuan-denominated bonds – over foreign investors.