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Bond Market News
Evergrande Gets Notice for $4.48bn Loan; Among Top List of Builders Due in HK Court
November 2, 2022
China Evergrande got a notice of enforcement from Shengjing Bank for unrecoverable funds. The bank said that the developer did not pay RMB 32.6bn ($4.48bn) that was lent to its unit from 2020 to 2021. As per Reuters, Evergrande’s 30.99% stake in Xinjiang Guanghui Industry Investment Group, which it had pledged to Shengjing Bank has now been enforced. Evergrande used to originally own a 36% stake in Shengjing Bank and started trimming it down since September 2021 when it sold a 20% stake to the local government for ~$2.8bn. Again in September 2022, the developer was said to be exiting its remaining 14.57% stake in the bank for RMB 7.3bn ($1.1bn). Evergrande’s dollar bonds were trading flat at ~4 cents on the dollar.
Separately, six property companies namely, China Evergrande, Sunac China, Jiayuan International, Sinic China , Fantasia Group and Leading Holdings face winding-up hearings in Hong Kong from November through January. The six developers have a combined ~$30bn in outstanding dollar bonds and Bloomberg notes that the petitions could lead to liquidation, thereby impacting the recovery of bondholders.
In related property market news, auditors of at least 14 Hong Kong-listed Chinese property firms have exited this year, as per Reuters, including names like Shimao Group and Sunac. While the auditors have not given any reason for their exits, developers say that they have not been able to reach agreements on time during the audit process. S&P Global Ratings director Edward Chan notes that insufficient information regarding hidden and off-balance sheet debts have made it difficult for auditors to complete their processes.
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