Huileng Tan
Mon, 20 December 2021,
Evergrande's assets are under scrutiny amid its debt crisis.
Feature China/Barcroft Media via Getty Images)
The land planning authority in the city of Chengdu said that it has taken over two plots of idle land from Evergrande.
This follows a similar move by Haikou city earlier.
The Chinese government can take back land if it has been sitting idle for more than two years.
Two cities in China have repossessed land from cash-strapped real estate developer Evergrande.
Last Friday, the land planning authority of the southwest city of Chengdu announced it had taken over two plots of land that had been sitting idle for over a decade. According to the notices, the two plots total over 340,000 sq. meters (31,587 sq. ft.).
According to a government notice published last Monday, Haikou city, located in Hainan province in southern China, took back eight plots of land from Evergrande for similar reasons.
Under Chinese law, the government can take back land that has been sitting idle for two years without having to compensate the property owner.
This latest move comes as China's government stepped in to oversee Evergrande's debt crisis. The company announced earlier this month that there was "no guarantee" it would have enough funds to meet debt repayments. Authorities have started auditing the assets of Evergrande and its billionaire founder, Hui Ka Yan, Reuters reported last week.
Shenzhen-headquartered Evergrande is the world's most indebted property developer, with $300 billion in liabilities. Investors fear its collapse could have a domino effect on China's economy — possibly sending the rest of the world into a financial crisis.
The Chinese government has signaled there will be no outright bailout for Evergrande. However, authorities have asked government-owned firms and state-backed property developers to buy some of Evergrande's assets, Reuters reported in September.
Guangzhou city authorities have also taken over Evergrande's soccer stadium and plan to sell it, as construction has come to a stop, Reuters reported last month, citing a person with direct knowledge of the matter.
Evergrande has divested some businesses to raise cash, including Chinese streaming platform HengTen and Dutch electric motor maker e-Traction.
S&P Global and Fitch Ratings recently said they consider the property giant to be in default.
Evergrande Defaults!
The land planning authority in the city of Chengdu said that it has taken over two plots of idle land from Evergrande.
This follows a similar move by Haikou city earlier.
The Chinese government can take back land if it has been sitting idle for more than two years.
Two cities in China have repossessed land from cash-strapped real estate developer Evergrande.
Last Friday, the land planning authority of the southwest city of Chengdu announced it had taken over two plots of land that had been sitting idle for over a decade. According to the notices, the two plots total over 340,000 sq. meters (31,587 sq. ft.).
According to a government notice published last Monday, Haikou city, located in Hainan province in southern China, took back eight plots of land from Evergrande for similar reasons.
Under Chinese law, the government can take back land that has been sitting idle for two years without having to compensate the property owner.
This latest move comes as China's government stepped in to oversee Evergrande's debt crisis. The company announced earlier this month that there was "no guarantee" it would have enough funds to meet debt repayments. Authorities have started auditing the assets of Evergrande and its billionaire founder, Hui Ka Yan, Reuters reported last week.
Shenzhen-headquartered Evergrande is the world's most indebted property developer, with $300 billion in liabilities. Investors fear its collapse could have a domino effect on China's economy — possibly sending the rest of the world into a financial crisis.
The Chinese government has signaled there will be no outright bailout for Evergrande. However, authorities have asked government-owned firms and state-backed property developers to buy some of Evergrande's assets, Reuters reported in September.
Guangzhou city authorities have also taken over Evergrande's soccer stadium and plan to sell it, as construction has come to a stop, Reuters reported last month, citing a person with direct knowledge of the matter.
Evergrande has divested some businesses to raise cash, including Chinese streaming platform HengTen and Dutch electric motor maker e-Traction.
S&P Global and Fitch Ratings recently said they consider the property giant to be in default.
Evergrande Defaults!
Now What?
12/15/2021
China Evergrande failed to make interest payments to offshore bondholder, prompting Fitch Ratings to upgrade the Company’s status to “restricted default” on December 9, making China Evergrande the twelfth Chinese real estate firm to default on bonds in 2021, and by far the largest to do so.
China Evergrande, the second-largest real estate developer in China, has been narrowly dodging default for months. The Company has more than US $300 billion in debt that, as it warned the market back in September, it believed would be difficult for it to service. (As an aside, it is believed that China Evergrande could have an additional US $150 billion in debt, off its official financial books).
Put simply, the cash flow of the Company, severely dampened by the cooling Chinese housing market, is not enough for it to service interest payments to those from which it borrowed funds, typically in the form of interest-bearing corporate bonds.
One such unlucky purchaser of China Evergrande corporate bonds, among others, are off-shore investors. Off-shore bondholders will likely be the least prioritised of the Company’s investors when receiving interest payments or reparations.
Evergrande defaults!
Perhaps fortuitously, it was the failure by China Evergrande to make interest payments to this very group of investors that prompted Fitch Ratings to upgrade the Company’s status to “restricted default” on December 9. Interestingly, China Evergrande is the twelfth Chinese real estate firm to default on bonds in 2021, and by far the largest to do so.
Now what?
Other rating agencies, such as Moody’s and S&P Global, have not been so quick to upgrade their status of China Evergrande. However, S&P Global has noted that China Evergrande’s default is “inevitable”.
China Evergrande themselves seem to be ignoring public comment on its failure to meet its obligation, nor has it ceased operations or begun any formal paperwork to address its potential bankruptcy.
China Evergrande is currently under restructuring while attempting to continue operations as usual. The restructuring includes renegotiating its liabilities and offloading non-construction arms of the Company at bargain prices such as its property management business, as well as stakes in a major Chinese bank and (strangely enough) a streaming services.
Pressure is being applied to the Company’s leaders to speed up its restructuring since the change in its Fitch rating. According to Bloomberg, the China Evergrande restructure is being heavily monitored, if not outright controlled by Chinese Authorities in Beijing and the Company’s home province of Guangdong.
Right now, the official line from the Central Bank of China is that the China Evergrande crisis is being handled as per the “principles of marketization and rule of law,”. If more rating agencies follow Fitch Rating in the coming weeks, China Evergrande could slip into something a little more serious than restricted default and the above quote may become a little truer, with Chinese authorities being hamstrung in their ability to interfere with a meltdown
China Evergrande failed to make interest payments to offshore bondholder, prompting Fitch Ratings to upgrade the Company’s status to “restricted default” on December 9, making China Evergrande the twelfth Chinese real estate firm to default on bonds in 2021, and by far the largest to do so.
China Evergrande, the second-largest real estate developer in China, has been narrowly dodging default for months. The Company has more than US $300 billion in debt that, as it warned the market back in September, it believed would be difficult for it to service. (As an aside, it is believed that China Evergrande could have an additional US $150 billion in debt, off its official financial books).
Put simply, the cash flow of the Company, severely dampened by the cooling Chinese housing market, is not enough for it to service interest payments to those from which it borrowed funds, typically in the form of interest-bearing corporate bonds.
One such unlucky purchaser of China Evergrande corporate bonds, among others, are off-shore investors. Off-shore bondholders will likely be the least prioritised of the Company’s investors when receiving interest payments or reparations.
Evergrande defaults!
Perhaps fortuitously, it was the failure by China Evergrande to make interest payments to this very group of investors that prompted Fitch Ratings to upgrade the Company’s status to “restricted default” on December 9. Interestingly, China Evergrande is the twelfth Chinese real estate firm to default on bonds in 2021, and by far the largest to do so.
Now what?
Other rating agencies, such as Moody’s and S&P Global, have not been so quick to upgrade their status of China Evergrande. However, S&P Global has noted that China Evergrande’s default is “inevitable”.
China Evergrande themselves seem to be ignoring public comment on its failure to meet its obligation, nor has it ceased operations or begun any formal paperwork to address its potential bankruptcy.
China Evergrande is currently under restructuring while attempting to continue operations as usual. The restructuring includes renegotiating its liabilities and offloading non-construction arms of the Company at bargain prices such as its property management business, as well as stakes in a major Chinese bank and (strangely enough) a streaming services.
Pressure is being applied to the Company’s leaders to speed up its restructuring since the change in its Fitch rating. According to Bloomberg, the China Evergrande restructure is being heavily monitored, if not outright controlled by Chinese Authorities in Beijing and the Company’s home province of Guangdong.
Right now, the official line from the Central Bank of China is that the China Evergrande crisis is being handled as per the “principles of marketization and rule of law,”. If more rating agencies follow Fitch Rating in the coming weeks, China Evergrande could slip into something a little more serious than restricted default and the above quote may become a little truer, with Chinese authorities being hamstrung in their ability to interfere with a meltdown
China Evergrande chief's stake in services unit drops on forced selling Finance
|24 Dec 2021
The China Evergrande Centre building sign is seen in Hong Kong. (Reuters)
The shareholding of China Evergrande Group's chairman in its property services unit has fallen to 58.18 percent from 60.96 percent after forced selling of pledged shares by a third party, a Hong Kong stock exchange filing showed.
The number of Evergrande Property Services Group shares involved was 300 million, and the drop was the result of steps taken on Dec. 20 to enforce rights to the shares held as security against chairman Hui Ka-yan, the filing said.
Reuters could not immediately determine who sold the pledged shares.
The stake was worth roughly HK$798 million (US$102.32 million), based on the stock's closing price of HK$2.66 on the day.
Shares of Evergrande Property Services Group ended 1.5 percent lower on Friday at HK$2.63.
Evergrande Group, grappling with over US$300 billion in liabilities and at risk of becoming China's biggest ever default, has been scrambling to raise cash by selling assets and shares.
Hui's stake in Evergrande Group itself dropped to 59.78 percent earlier this month, also on forced selling.
(Reuters)
The shareholding of China Evergrande Group's chairman in its property services unit has fallen to 58.18 percent from 60.96 percent after forced selling of pledged shares by a third party, a Hong Kong stock exchange filing showed.
The number of Evergrande Property Services Group shares involved was 300 million, and the drop was the result of steps taken on Dec. 20 to enforce rights to the shares held as security against chairman Hui Ka-yan, the filing said.
Reuters could not immediately determine who sold the pledged shares.
The stake was worth roughly HK$798 million (US$102.32 million), based on the stock's closing price of HK$2.66 on the day.
Shares of Evergrande Property Services Group ended 1.5 percent lower on Friday at HK$2.63.
Evergrande Group, grappling with over US$300 billion in liabilities and at risk of becoming China's biggest ever default, has been scrambling to raise cash by selling assets and shares.
Hui's stake in Evergrande Group itself dropped to 59.78 percent earlier this month, also on forced selling.
(Reuters)
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