Hong Kong/Shanghai: China evergrande The group’s deal to sell a 51% stake in its property services unit has been put on hold, two people with knowledge of the matter said, a blow to the troubled developer’s hopes to avoid a potentially disruptive default.
Evergrande, on the verge of collapse with more than $300 billion in debt, was in talks to sell a stake in Evergrande Property Services to smaller rival Hopson Development Holdings for about HK$20 billion ($2.6 billion), sources previously said. told Reuters.
However, the deal, which was set to be the biggest asset sale ever for the company, has been put on hold as it has yet to receive the blessing of the Guangdong provincial government, which is overseeing the restructuring of Evergrande. one said on Tuesday.
When contacted, a representative for Hopson told Reuters to wait for an announcement. Evergrande and the Guangdong provincial government did not immediately respond to Reuters requests for comment.
Evergrande is scrambling to raise money to pay off several of its lenders and suppliers, amid concerns about a potential offshore default later this week as it missed a series of interest payments due to its bonds. had gone.
However, Evergrande’s flagship unit, Hengda Real Estate Group Co, has remitted funds to pay an onshore bond coupon of 121.8 million yuan ($19 million) due on Tuesday, four people with knowledge of the matter said.
One of the people said Evergrande, China’s No. 2 developer, needs to prioritize its limited funds for the domestic market where the stakes for the country’s financial system are very high.
While it was not immediately clear why the Guangdong provincial government did not approve the Evergrande property services transaction, some of Evergrande’s offshore creditors also opposed the deal, the person said.
Another source said the announcement of the deal would be delayed pending regulatory approval from China. He said the deal has already received special approval from the Hong Kong Stock Exchange.
Reuters reported last week that Chinese state-owned Yuxiu Properties had pulled out of a proposed $1.7 billion deal to buy Evergrande’s Hong Kong headquarters building over concerns about the developer’s dire financial situation.
A source said the company had also received guidance from the municipal government of the southern city of Guangzhou to halt purchases in late August. read more
market turmoil
The liquidity crisis in Evergrande has rocked global markets. High-yield bonds issued by Chinese property developers have been particularly hard hit.
An Evergrande bond will officially be in default due March 23, 2022 if the company doesn’t do well after the 30-day grace period for the missed coupon payment on September 23.
But the broader offshore bond market has reacted positively after comments from China’s central bank and two other major developers assured coupon payments.
An index of China’s high-yield debt, which is dominated by property developer issuers, has seen a spread of nearly 1,484 points on Tuesday from a record low of last week.
Sunac China, which has a payment of $27.14 million on Tuesday, has paid its bondholders, a source with direct knowledge of the matter said.
The source was not authorized to speak to the media and declined to be identified. A Sunak representative declined to comment.
Cassa Group said Monday that it had paid out a coupon on October 16 and plans to transfer funds for a coupon of $35.85 million due on Thursday, October 22. read more
Over the past few days, the People’s Bank of China has said that the spillover effects on the banking system from Evergrande’s credit problems were controllable and that China’s economy was “doing well”.
Bonds from Chinese developers acquired on Tuesday included Modern Land’s 2022 bonds, which jumped 8% to 40.250 cents on the dollar, while Central China Real Estate’s 2024 bonds rose 5% to 44.843 cents.
On Monday, smaller developer Cynic Holdings defaulted on $246 million in bonds as expected. It warned of defaults last week, saying it did not have sufficient financial resources.
Evergrande, on the verge of collapse with more than $300 billion in debt, was in talks to sell a stake in Evergrande Property Services to smaller rival Hopson Development Holdings for about HK$20 billion ($2.6 billion), sources previously said. told Reuters.
However, the deal, which was set to be the biggest asset sale ever for the company, has been put on hold as it has yet to receive the blessing of the Guangdong provincial government, which is overseeing the restructuring of Evergrande. one said on Tuesday.
When contacted, a representative for Hopson told Reuters to wait for an announcement. Evergrande and the Guangdong provincial government did not immediately respond to Reuters requests for comment.
Evergrande is scrambling to raise money to pay off several of its lenders and suppliers, amid concerns about a potential offshore default later this week as it missed a series of interest payments due to its bonds. had gone.
However, Evergrande’s flagship unit, Hengda Real Estate Group Co, has remitted funds to pay an onshore bond coupon of 121.8 million yuan ($19 million) due on Tuesday, four people with knowledge of the matter said.
One of the people said Evergrande, China’s No. 2 developer, needs to prioritize its limited funds for the domestic market where the stakes for the country’s financial system are very high.
While it was not immediately clear why the Guangdong provincial government did not approve the Evergrande property services transaction, some of Evergrande’s offshore creditors also opposed the deal, the person said.
Another source said the announcement of the deal would be delayed pending regulatory approval from China. He said the deal has already received special approval from the Hong Kong Stock Exchange.
Reuters reported last week that Chinese state-owned Yuxiu Properties had pulled out of a proposed $1.7 billion deal to buy Evergrande’s Hong Kong headquarters building over concerns about the developer’s dire financial situation.
A source said the company had also received guidance from the municipal government of the southern city of Guangzhou to halt purchases in late August. read more
market turmoil
The liquidity crisis in Evergrande has rocked global markets. High-yield bonds issued by Chinese property developers have been particularly hard hit.
An Evergrande bond will officially be in default due March 23, 2022 if the company doesn’t do well after the 30-day grace period for the missed coupon payment on September 23.
But the broader offshore bond market has reacted positively after comments from China’s central bank and two other major developers assured coupon payments.
An index of China’s high-yield debt, which is dominated by property developer issuers, has seen a spread of nearly 1,484 points on Tuesday from a record low of last week.
Sunac China, which has a payment of $27.14 million on Tuesday, has paid its bondholders, a source with direct knowledge of the matter said.
The source was not authorized to speak to the media and declined to be identified. A Sunak representative declined to comment.
Cassa Group said Monday that it had paid out a coupon on October 16 and plans to transfer funds for a coupon of $35.85 million due on Thursday, October 22. read more
Over the past few days, the People’s Bank of China has said that the spillover effects on the banking system from Evergrande’s credit problems were controllable and that China’s economy was “doing well”.
Bonds from Chinese developers acquired on Tuesday included Modern Land’s 2022 bonds, which jumped 8% to 40.250 cents on the dollar, while Central China Real Estate’s 2024 bonds rose 5% to 44.843 cents.
On Monday, smaller developer Cynic Holdings defaulted on $246 million in bonds as expected. It warned of defaults last week, saying it did not have sufficient financial resources.
.