December 5, 2022

Dubai Week

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"Fitch" classifies Chinese real estate "Evergrand" as "default" ... and confirms the liability of central bank institutions for debt.

“Fitch” classifies Chinese real estate “Evergrand” as “default” … and confirms the liability of central bank institutions for debt.

BEIJING – China’s central bank governor Yi Zhang said on Thursday that Beijing did not want to intervene to save the troubled real estate firm Evergrande.
He described the risks faced by the company in the market and will be dealt with proportionately and “in accordance with market policies and the rule of law”.
He emphasized that the Hong Kong Stock Exchange was a mature financial center in which shares of complex companies were traded, and that it had an effective system and clear rules and procedures to deal with a variety of issues.
He added that “short-term risks to some real estate companies” do not affect normal financing in the medium and long-term market.
He stressed that companies and shareholders are obliged to deal with their “debts” in proportion to law and market rules, as well as to protect the interests of creditors in a fair and lawful manner.
This comes as the Evergrande Group was officially classified as “default” for the first time. Credit rating agency Fitch downgraded the company to “default on certain obligations” on Monday for failing to pay its deadline.
This development marks the beginning of the end of the vast real estate empire that was started 25 years ago by founder Hui Ka Yan, which will start a long battle over who will get the money from the remaining creditors in the company.
This development is a challenge to the Chinese government’s efforts to curb the epidemic of debt default in the real estate sector. Evergrande has been suffering from a severe crisis for months and is the most indebted real estate developer in the world. There was an urgent need to provide financial assistance to banks, suppliers and securities to repay loans on time. Its total debt is currently estimated at $ 300 billion. Its stock has lost about 88% of its value since the beginning of this year.
The Guangdong provincial government, where the company is located, has sent a team of financial analysts to assess the size and risks of the loan, state media reported.
More recently, the crisis facing the giant Chinese real estate company has begun to move to more real estate companies in the market.
Yesterday, the trading of shares of “Caisa Group Holdings” on the Hong Kong Stock Exchange was suspended, amid concerns about the company’s ability to fulfill its financial obligations.
The group, ranked 27th among real estate developers, is repaying a $ 400 million bond.
Informed sources said yesterday that a group of securities had suggested a delay but the next phase of action had not yet been decided.
The company’s stock has lost 75% of its value since the beginning of this year.

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