China Evergrande has issued a statement explicitly warning about insufficient funds and the potential that it will fail to complete debt repayments.
After weeks of relative calm, debt-laden developer China Evergrande has issued a warning about its deteriorating financial health.
«In light of the current liquidity status […] there is no guarantee that the group will have sufficient funds to continue to perform its financial obligations,» according to an exchange filing late last Friday.
Evergrande also said that it plans to «actively engage» with offshore creditors on a restructuring plan, adding that it has already received demand from creditors to make about $260 million in payments.
Regulators Jump in
Following Evergrande’s filing, the government of the Guangdong province summoned founder Hui Ka Yan to express concerns over the announcement, adding that a team was dispatched to ensure «normal» operations at the developer.
The People’s Bank of China also issued its own statements, blaming Evergrande’s problems on the developer’s «own mismanagement» and «breakneck expansion».
The China Banking and Insurance Regulatory Commission (CBIRC) assured that it would increase support for guaranteed rental housing while the China Securities Regulatory Commission (CSRC) said any fallout in capital markets would be «controllable» and that it would maintain support for property developers' funding needs.
Countdown Again
Meanwhile, Evergrande faces another debt countdown after making last-minute payments since late October.
Today, a 30-day grace period will end on two dollar bond interest payments originally due on November 6, including a $41.9 million coupon for a 2022 note and a $40.6 million coupon for a 2023 note.
