China Evergrande Shares, Bonds Suffer Sell-Off on Cash-Crunch Concern

HONG KONG—Investors sold off China Evergrande Group shares and bonds on Friday after a leaked document allegedly showed the nations second-biggest property developer by sales sought government help to avert a cash crunch.

The document showed Evergrande asked a local government to support a Shenzhen backdoor listing plan before Jan. 31 or else it would need to repay over $19 billion raised for the listing, which would weigh on its cash flow.

Evergrande late on Thursday said the document which had been circulating online was a fabrication and amounted to defamation, and it has reported the matter to the public securities authority.

Analysts including those at S&P Global Ratings have said they do not expect a liquidity crunch as the firm has various fund-raising channels, including as much as $117 billion in sales this year, domestic bond issuance, and spin-off plans.

China Evergrande Centre in Hong Kong
An exterior view of China Evergrande Centre in Hong Kong, China, on March 26, 2018. (Bobby Yip/Reuters)

On Friday, at least two onshore bonds issued by Evergrande Real Estate Group were suspended from trade after their prices fell as much as 30 percent.

China Evergrandes Hong Kong-listed shares sank as much as 8.8 percent to a near five-month low. Subsidiaries Evergrande New Energy Vehicle Group Ltd and HengTen Networks Group Ltd tumbled 14 percent and 20 percent respectively.

The developer is under pressure to de-leverage as Chinas government tackles what it considers excessive borrowing in the real estate development sector with new debt ratio caps.

Evergrandes borrowings totaled 835.5 billion renminbi at June-end, of which onshore trust loans and bank lending made up 41 percent and 29 perceRead More – Source

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