Evergrande on brink of default, creditors demand $260 million

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Evergrande on brink of default, creditors demand $260 million

A traffic light is seen near the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. HONG KONG, Dec 6, Reuters -- After lurching from deadline to deadline, China Evergrande Group 3333. With pessimismistic comments from the property developer raising expectations of direct state involvement and debt restructuring, HK is on the brink of default.

Evergrande has had three 11th hour coupon payments in the past two months, and will have to face the end of a 30 day grace period on Monday, with dues this time at $82.5 million.

A statement late on Friday said creditors had demanded $260 million and that it could not guarantee enough funds for coupon repayment prompted authorities to summon its chairman, and wiped an eighth off its stock's market value on Monday.

Evergrande was once China's top-selling developer, but is now grappling with more than $300 billion in liabilities, which could have a negative impact on the property sector and beyond.

Friday's statement was followed by one from Guangdong province, who said they would send a working group to Evergrande to oversee risk management, strengthen internal control and maintain operations.

The central bank, banking and insurance regulators and securities regulators released statements saying that the risk to the broader property sector could be contained.

The People's Bank of China said that the short-term risk from a single real estate firm will not undermine market funding in the medium or long term. In China, housing sales, land purchases and financing have returned to normal, according to a report.

Analysts said that authorities' concerted effort indicated that Evergrande had entered a managed debt-asset restructuring process to reduce systemic risk.

Morgan Stanley said such a process would involve coordination between authorities to maintain normal operation of property projects, and to negotiate with onshore creditors to ensure financing for projects' development and completion.

The debt restructuring discussion with offshore creditors would be helped by regulators after business operations start to stabilise, according to the U.S. investment bank.

Evergrande's November 2022 bond - one of two bonds that could go into default on Monday -- was trading on Monday at the distressed price of 20.787 U.S. cents on the dollar, compared to 20.083 cents at the end of Friday.

Its share price fell by more than 12% to HK $1.98 $0.2540, its lowest since May 2010.