Evergrande’s bond trading is suspended due to growing concerns about cash crunch

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Evergrande Real Estate Group Co., Ltd. update

Due to concerns about the deepening of the liquidity crisis, the bonds of this stressed real estate developer fell to new lows, and trading of some bonds issued by China Evergrande was suspended on Friday.

According to data from the China Southern City Stock Exchange, investors were temporarily unable to buy and sell the company’s debt in Shenzhen in early trading after the price fell more than the 20% daily limit. According to data provider Wind, before the suspension, the yield on RMB-denominated bonds due in 2023 is about 49%.

According to a statement, another bond on the Shanghai Stock Exchange was suspended due to “abnormal fluctuations” before trading was resumed.

These interventions mark the latest escalation of the recent violent dumping of stocks and bonds of China’s most indebted developer Evergrande and one of its largest borrowers in the international market.The company raised concerns about its future after issuing a warning on Tuesday Default Risk.

Evergrande Deleveraging and selling assets In recent months, there are still 572 billion yuan (89 billion US dollars) in debt, and the value of its securities has fallen sharply this week. The trading price of an offshore bond maturing in 2025 is 26 cents per dollar, the lowest record so far. The trading price of another bond due next year was 35 cents per dollar, and it was close to its face value at the end of May.

Evergrande blamed the “negative impact” of the recent “negative reports”, saying it caused delays in construction costs and supplier payments. Its Hong Kong-listed shares fell 1.7% last Friday and have fallen more than 70% this year.

The latest fall in Evergrande’s bonds was not immediately triggered, but Bloomberg News reported on Friday that its two largest non-bank creditors demanded immediate repayment of part of their loans.

The company’s liquidity issues are also due to Sudden increase in legal challenges Issues with contractors and the suspension of some of their projects by local authorities and disputes with lenders.

Evergrande was founded in 1996. While helping to promote China’s urbanization process, Chairman Xu Jiaren became the richest man in China 20 years later.The company is considered Vital to health China’s financial system has attracted attention because of its huge debts. It needs to sell its apartments to provide services to continuously generate cash.

China’s top regulator took an unusual move in August Public reprimand The company called on it to solve the debt problem. In the same month, Standard & Poor’s Global Ratings downgraded the company’s credit rating to three C’s to go deeper into the field of speculation.

“The situation is still the same,” BNP Paribas analyst Agnes Wong pointed out that Evergrande needs to act quickly on asset disposal. “People saw the company admit that they were at risk of defaulting on borrowings, and the market panicked.”

Market volatility surrounding Evergrande triggered a broader sell-off China High Yield Issuer Bonds denominated in U.S. dollars. The ICE and Bank of America indexes show that the average yield last week was about 13%, compared with less than 10% in June.

Part of Evergrande’s bond transactions Also stopped In Shanghai last year, concerns about a cash crunch were raised by issues related to a subsidiary’s listing plan.

Additional reporting by Shanghai Wang Xueqiao and Hong Kong Hudson Lockett

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