Trading in shares of the real estate giant has been suspended on the Hong Kong Stock Exchange since October 4th.
(Photo: Reuters)
Beijing, Hong Kong The Chinese central bank broke its silence in the crisis surrounding real estate company Evergrande. A spokesman for the central bank said at a press conference on Friday that the risks for the financial system emanating from the Group’s financial distress are manageable. It is unlikely that the Evergrande crisis will spread to other areas. However, the central bank called on the country’s banks to ensure a stable supply of credit to the country’s real estate companies.
In the morning, the Bloomberg news agency, citing insiders, reported that the government in Beijing had facilitated the granting of real estate loans in order to keep the risk of the Evergrande crisis spilling over to the financial markets. Accordingly, the financial regulator ordered some major banks last month to accelerate lending for real estate loans.
The Evergrande crisis is weighing on the Chinese financial and real estate market. Trading in shares of the highly indebted Chinese real estate giant and its property management company on the Hong Kong Stock Exchange has been suspended since October 4th.
Meanwhile, the planned multi-billion dollar sale of the property giant’s Hong Kong headquarters failed for the time being. The state owned real estate developer Yuexiu Property has withdrawn from the talks given the difficult financial position of the company, as two people familiar with the matter reported on Friday. A purchase of the building complex for the equivalent of $ 1.7 billion had been negotiated. Evergrande and Yuexiu left requests for comment unanswered.
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The failure of the negotiations is another setback for Evergrande. The company is sitting on a mountain of debt of more than $ 300 billion and has already missed several deadlines for due interest payments to its bondholders. Given the size of the debt, there are concerns that a collapse of Evergrande could spark a conflagration in China’s real estate sector.
According to insiders, Yuexiu was close to closing the deal as early as August. But the management of the real estate developer based in the metropolis of Guangzhou has opposed an agreement. The reason was fears that the unresolved debt situation at Evergrande might stand in the way of a smooth conclusion of the transaction. Evergrande acquired the 26-story Evergrande Center in Hong Kong’s Wan Chai district six years ago for the equivalent of $ 1.61 billion.
More: Evergrande still owes millions in payment for land acquisition