Evergrande's $2.6 bln unit stake sale fails as Chinese officials seek to calm nerves

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uncledad
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Evergrande's $2.6 bln unit stake sale fails as Chinese officials seek to calm nerves

Unread post by uncledad »

HONG KONG/SHANGHAI, Oct 20 (Reuters) - Teetering Chinese property giant China Evergrande (3333.HK) formally abandoned plans to sell a $2.6 billion stake in one of its key units on Wednesday, as Beijing officials went out in force to say the problems would not spin out of control.

Worries that a cash crunch at Evergrande, whose liabilities equal to 2% of China's gross domestic product, could cause economic contagion have resulted in its debt-laden peers being hit with a wave of credit rating downgrades, while some smaller have already defaulted on their bonds.

Chinese property developers have total outstanding debt of 33.5 trillion yuan ($5.24 trillion), according to Nomura, equivalent to roughly a third of the country's gross domestic product.

Those comments followed a speech by People's Bank of China (PBOC) Governor Yi Gang, who said on Sunday that the world's second-largest economy is "doing well" but faces challenges such as default risks for certain firms due to mismanagement." read more

A transcript of the comments released by the PBOC on Wednesday showed Yi also saying that China will fully respect and protect the legal rights of Evergrande's creditors and asset owners, in line with "repayment priorities" laid out by China's laws.

https://www.reuters.com/business/china- ... 021-10-20/

+++ China's version of too big to fail.
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Re: Evergrande's $2.6 bln unit stake sale fails as Chinese officials seek to calm nerves

Unread post by Vercingetorix »

uncledad wrote: October 20th, 2021, 2:45 pm HONG KONG/SHANGHAI, Oct 20 (Reuters) - Teetering Chinese property giant China Evergrande (3333.HK) formally abandoned plans to sell a $2.6 billion stake in one of its key units on Wednesday, as Beijing officials went out in force to say the problems would not spin out of control.

Worries that a cash crunch at Evergrande, whose liabilities equal to 2% of China's gross domestic product, could cause economic contagion have resulted in its debt-laden peers being hit with a wave of credit rating downgrades, while some smaller have already defaulted on their bonds.

Chinese property developers have total outstanding debt of 33.5 trillion yuan ($5.24 trillion), according to Nomura, equivalent to roughly a third of the country's gross domestic product.

Those comments followed a speech by People's Bank of China (PBOC) Governor Yi Gang, who said on Sunday that the world's second-largest economy is "doing well" but faces challenges such as default risks for certain firms due to mismanagement." read more

A transcript of the comments released by the PBOC on Wednesday showed Yi also saying that China will fully respect and protect the legal rights of Evergrande's creditors and asset owners, in line with "repayment priorities" laid out by China's laws.

https://www.reuters.com/business/china- ... 021-10-20/

+++ China's version of too big to fail.
Far less aggregate demand in a communist society.
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