Chinese local government intervenes in Evergrande crisis
While Beijing has stayed quiet on the Evergrande debt crisis at least two local governments in China have seized control of company funds.
A housing bureau in Guangzhou asked an Evergrande subsidiary to put presale revenue from a halted development project into a state-controlled account to protect the interests of homebuyers, the Financial Times first reported.
Likewise, a district housing bureau in the city of Zhuhai asked an Evergrande residential project to transfer sale proceeds to a government account.
According to local media eight other provinces have made requests for Evergrande to place presales revenue into custodial accounts since August as the ailing developer put multiple projects on hold.
On Friday, China’s largest property developer missed a payment deadlines to bondholders, indicating the indebted property developer is on the verge of collapse.
Evergrande is estimated to have $305bn in liabilities, including $20bn of outstanding debt on offshore markets, caused by the company financing its rapid expansion across China through heavy borrowing.
The company has seen its share price plummet in recent weeks, down -42.37 per cent in a month, after Beijing cracked down on highly leveraged property developers.
The sheer size of the company, which had planned a vast number of development projects and owes payments to a multitude of shareholders, has caused rumours of a collapse to rock global markets.
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