Hong Kong on Monday suspended trading in shares of the world’s most indebted real estate developer, Evergrande, pending the release of “inside information” from the Chinese company that could shed light on its restructuring and the fate of international investors.
The real estate developer, which defaulted on its international debt last year along with a host of its peers, is at the center of a nationwide liquidity crisis across China’s real estate sector, which is fueling economic growth and supporting jobs.
Evergrandes restructuring, which is expected to be the largest ever in China, is a defining moment in the history of the Asian dollar bond market. The company has borrowed more than $20 billion in dollar-denominated bonds of its more than $300 billion in debt. However, it has made few detailed disclosures as Chinese authorities work to limit the impact of the company’s collapse.
A person close to the situation said Evergrande is expected to hold talks with international investors later on Monday. In a statement to the Hong Kong Stock Exchange, the company said the trading suspension was awaiting the release of information, but gave no further details.
Evergrande first had serious liquidity problems last summer and began missing payments on international bonds in September as work on many of its hundreds of construction projects ground to a halt and the company struggled to find cash to pay workers and creditors.
State-run media house The Paper reported on Sunday that the group sold a 30 percent stake in a company based in Nanjing, a major city in eastern Jiangsu province.
Hui Ka Yan, Evergrande’s billionaire chairman, who was once China’s richest man, tried to restore confidence in the company last month Distress sales of assets excludedand said the company will complete half of its remaining projects during 2022.
Chinese real estate developers, who have supported the country’s rapid urbanization, often sell apartments to homebuyers before construction is complete. The looming backlash from homebuyers has turned the crisis in the real estate sector into both a political and an economic challenge for President Xi Jinping’s government.
International investors in Evergrande, which mainly operates in mainland China, have often been left in the dark about its status and in January warned of possible legal action about lack of commitment.
The fate of Evergrande and its massive debt has become a test case for China’s broader economic model, which has been anchored in property growth for years but is losing momentum. In 2022, the government unveiled a Growth target of 5.5 percentits lowest in three decades.
Additional reporting by Wang Xueqiao
https://www.ft.com/content/7b173ea8-dc3e-477b-a6bd-4bc478d0c4e1 Hong Kong suspends trading in shares of Chinese real estate developer Evergrande