Evergrande share price dives as new debt payment deadline approaches
Evergrande, the Chinese property development behemoth, again faces the possibility of defaulting on its debt as it approaches a deadline for a $82.5m repayment.
Upon markets closing on Monday, shares in the group are down by nearly 20%.
It is the first time shares have traded since Evergrande made an announcement last friday that they may not be able to meet a $260m obligation, while also confirming that its chair had been summoned by regulators.
Additionally, Evergrande has constructed a new risk management committee, made up of members from state-controlled firms.
Sunshine 100 failed making a $179m payment yesterday and the grace period of two $82.5m bonds from Evergrande ends literally in 1 hour and there is still no payment in sight! Wouldn't be surprised however if something magically appears last minute from this defaulted company.— Dr_Marco_Metzler (@metzler_dr) December 6, 2021
In a statement issued on Monday evening, Evergrande said that its new risk management committee would “play an important role in mitigating and eliminating the future risks of the group”.
Evergrande added that “the resources [that committee members] would be able to utilise will be beneficial for the group to overcome the challenges it currently faces”.
Regulators in China are doing the best to calm fears over the potential of a fallout from both domestic and overseas investors.
The central bank confirmed plans to free up $188bn worth of liquidity for China’s banking system.
It will do this by cutting the share of deposits financial institutions must hold in reserve by 50 basis points, which should allow for more money to be directed towards stimulating the economy.
For months now, all commentators have been displaying a form of bullish retardation, hoping every day that Evergrande will make payments, that the CCP phone will ring to save them, that rates will be cut, that liquidity will be injected. Dudes, it’s illiquid and insolvent pic.twitter.com/BAl2rsptlq— Girolamo Pandolfi da Casio ditto Carlo Dossi Erba (@INArteCarloDoss) December 6, 2021