PBOC and CBIRC pressure Evergrande to resolve debt risks
Evergrande must actively diffuse debt risk and keep the real estate and financial markets stable, the PBOC and CBIRC said in a rare joint statement.
The People’s Bank of China (PBOC) and China Banking and Insurance Regulatory Commission (CBIRC) reportedly summoned executives from the China Evergrande group for regulatory discussions and ordered the company to reduce its debt risk and prioritize debt. stability.
Evergrande is China’s most indebted real estate developer and has come under scrutiny in recent weeks over fears that a financial crisis at the company poses a systemic risk. The company’s difficulties in obtaining proof to pay its lenders have reportedly damaged confidence in China’s credit markets.
Evergrande has more than CNY 240 billion in invoices and contractors’ trade debts to settle over the next 12 months, according to rating agency S&P Global. Its bonds enjoy undesirable rating status from S&P, Moody’s and Fitch, all of which have recently issued downgrades.
The company continued to sell assets to meet its debt repayment obligations, including efforts to offload part of its Evergrande NEV electric car unit. Evergrande is also said to be in talks to sell its largest real estate asset, China Evergrande Center in Hong Kong’s Wanchai district, for around $ 2 billion, as well as a building in Guangzhou.
Evergrande must “actively disseminate debt risk and maintain stability in real estate and financial markets,” the PBOC and CBIRC said in a rare joint statement.
“Evergrande, as a leading real estate company, must seriously implement the strategic arrangements made by the central government to ensure the stable and healthy development of the real estate market, and strive to maintain stable operations.”
The statement said senior executives at Evergrande have been called for talks and urged to abide by disclosure rules and respond quickly to market rumors.
Evergrande said in a statement on Friday August 20 that it would “fully implement” the maintenance requirements, reduce its debt risk and keep the real estate market stable.
“We will ensure the quality of the construction and we will ensure that we deliver quality homes in quantity. We will diffuse our debt risk and maintain the stability of the real estate and financial markets with our utmost determination and efforts, ”the company said.