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Evergrande headquarters in Hong Kong: Only the sign is shiny.
Photo: TYRONE SIU / REUTERS
China's highly indebted real estate giant Evergrande is staggering towards insolvency - and there are increasing indications that the group cannot count on help from the state.
China's central bank chief Yi Gang has signaled that the government in Beijing does not want to come to the aid of the group with rescue measures.
According to the central bank, Yi Gang said on Thursday that Evergrande's risks were a "market process" that would be dealt with appropriately "in accordance with the principles of the market and the rule of law."
As a mature financial center, Hong Kong, where Evergrande is listed on the stock exchange, has an efficient system as well as clear rules and procedures to deal with relevant issues, the central bank chief emphasized.
In his opinion, the »short-term risks of individual real estate companies« will not affect normal financing on the market in the medium or long term.
More than $ 300 billion in debt
According to him, the central bank advocates the creation of a "fair market environment".
Corporations and shareholders would have to deal appropriately with "their own debts" in accordance with legal requirements and market regulations and protect the interests of creditors in a fair and legal manner.
Evergrande is more than $ 300 billion in debt.
A week ago, the real estate giant itself warned of possible payment difficulties.
After a financial review, no guarantee can be given that the group will have sufficient funds to meet its financial commitments, the company said.
Rating agency warns of impending insolvency
The authorities of the southern province of Guangdong sent a working group to the company over the weekend.
A restructuring of the credit burdens is possible.
The uncertainties and the tightened action taken by the Chinese government against the high debt of real estate groups have meanwhile also brought other companies in the sector into difficulties.
The rating agency Fitch is already warning the two Chinese real estate companies Kaisa and Evergrande of an imminent payment default.
Fitch put both companies on the “Restricted Default (RD)” level on Thursday morning, as the agency announced.
"Restricted Default" means something like "restricted credit default".
The rating is only one level above the classification for payment default ("D - Default").
beb / dpa
