Hong Kong suspended trading in the world’s most indebted real estate developer, Evergrande, on Monday, 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 debts last year, along with many of its peers, is at the center of a national liquidity crisis across China’s real estate sector, which promotes economic growth and sustains employment.
Evergrande’s restructuring, which is expected to be the largest ever undertaken in China, is a watershed moment in the history of the Asian dollar bond market. The company has borrowed more than US$20 billion (R$101 billion) in dollar-denominated securities from its more than US$300 billion (R$1.5 trillion) in liabilities. But he gave little detailed information as Chinese officials work to limit the impact of the company’s collapse.
A person close to the situation said that Evergrande was due to have a conference call with international investors later this Monday. In a statement to the Hong Kong stock exchange, the company said the suspension of trading was pending the release of information, but did not provide further details.
Evergrande faced serious liquidity problems last summer and began slipping on international bond payments in September, when work on many of its hundreds of projects came to a halt and the builder struggled to raise money to pay workers and creditors.
On Sunday (20), state media channel O Jornal reported that the group was selling a 30% stake in a company based in Nanjing, a major city in eastern Jiangsu province.
Hui Ka Yan, the billionaire chairman of Evergrande who was once China’s richest man, has tried to restore confidence in the company and last month ruled out selling assets, saying it would complete half of its remaining projects over the course of 2022.
Chinese homebuilders, which have sustained the country’s rapid urbanization, often sell apartments to individuals before construction is complete. The threat of a backlash from buyers has turned the real estate crisis into a political and economic challenge for President Xi Jinping’s government.
International investors at Evergrande, which mainly operates in mainland China, have often been left in the dark about their situation and, in January, warned of possible legal action for lack of involvement.
The fate of Evergrande and its vast debts has become a test case for China’s economic model in general, which for years has been anchored in real estate growth but is losing steam. In 2022, the government released a growth target of 5.5%, the lowest in three decades.
Additional reporting by Wang Xueqiao. Translated by Luiz Roberto M. Gonçalves
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