China Evergrande Group will make it a top priority to help retail investors redeem their investment products sold by the indebted property giant, its chairman said, as uncertainty looms over interest payment due for a dollar bond on Thursday.
The logo of China Evergrande is seen at outside China Evergrande Centre building in Hong Kong, China September 23, 2021. REUTERS/Tyrone Siuwill make it a top priority to help retail investors redeem their investment products sold by the indebted property giant, its chairman said, as uncertainty looms over interest payment due for a dollar bond on Thursday.
"So in my opinion it signals they are closer to being in a position where they have an agreement about how they should manage the situation.""We think there are two parts to this: One, the nature of investors and, two, how far the investors sit from the assets. "With regards to the bonds denominated in dollars , dollar bonds are issued out of offshore entities who sit further away from the assets located in China and would be subordinated to lenders onshore. Being far from assets would mean lower bargaining power versus other lenders closer to the assets, especially lenders who have direct claims on assets.
"We assume that the Chinese leadership will intervene, but attention will be paid to the exact form it takes. The authorities will try to prevent a spillover into other sectors by breaking up Evergrande to release liquidity. At the same time, Beijing is likely to try to protect private property buyers who have already paid for their flats and are making mortgage payments but are waiting for completion. The government is thus likely to ensure the completion of real estate projects.
"The difference this time is that Evergrande owes 600,000 apartments to the buyers with a total value of 200 billion yuan , and over 600 billion yuan to the construction firms and suppliers.
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