SHANGHAI – Some creditors of heavily indebted Chinese real estate giant Evergrande Group are demanding the immediate payback of loans, said a report today, days after the company acknowledged that it may default on some of its massive borrowings.
Fear of a potential meltdown at Evergrande – and the potential impact on the world’s second-largest economy – has increasingly weighed on investors and regulators after the firm went on a debt-fuelled expansion binge.
Evergrande earlier this week said total liabilities have swelled to 1.97 trillion yuan (RM1.27 trillion), and that the group faces mounting legal challenges and “risks of defaults on borrowings”.
Two trust companies – among Evergrande’s largest non-bank creditors – have demanded immediate repayment on some loans, reported Bloomberg News today, citing unidentified people familiar with the matter.
The trusts sent repayment notices to Evergrande over the past two months after becoming concerned about the firm’s stability, said Bloomberg.
The amount of loans affected was not given.
Evergrande is one of the largest private companies in China and a leading real estate developer, with a presence nationwide.
Chinese regulators have moved aggressively in recent years to rein in runaway debt at giant conglomerates, such as real estate titan Wanda and tourism conglomerate Fosun, forcing them to sell off assets and slim down.
Similar efforts are under way at Evergrande, amid reports that regulators, banks, creditors and potential asset buyers are coordinating on how to sort out its debt pile.
Evergrande has already sold stakes in some of its wide-ranging assets and offered steep discounts to offload apartments, but still reported a 29% slide in profit for the first half earlier this week.
The government has so far been quiet on whether it will step in with financial support.
But due to its large presence in the economically important real estate sphere, Evergrande is widely considered to be too big to fail.
Investors have been hit, however, with Evergrande’s various listed entities shedding more than US$100 billion (RM415.3 billion) in value since early this year.
In recent years, the predominantly real estate group has diversified into mineral water, food products and amusement parks. It has also invested in tourism, digital operations, insurance and health. – AFP, September 3, 2021
