Evergrande: Crisis-hit Chinese property giant ordered to liquidate
Evergrande liquidation highlights investor despair at China Corporate debts.
The firm has been the poster child of China’s real estate crisis with more than $300bn (£236bn) of debt.
A liquidation order for China’s most debt-laden developer begins a drawn-out process for creditors that is likely to lay bare the depths of China’s real-estate downturn and leave builders locked out of global debt markets as investors shun exposure.
A Hong Kong court-appointed liquidator for China Evergrande, opens a new tab on Monday, more than two years after its default brought a years-long property boom to a shuddering halt.
It has assets of $240 billion and is the world’s most indebted developer with nearly $300 billion in liabilities. Markets expect foreign bondholders to be the biggest losers and owners of unfinished apartments to be prioritised.
The restructure or sale also holds broader significance for debt and real estate and for investor confidence as it unfolds against a backdrop of sliding home prices and economic malaise that’s sent equity markets spiralling down to multi-year lows.
Evergrande debts trade below two cents on the dollar and its shares hit a record low on Monday before being suspended.
Rock-bottom confidence is meanwhile on display in primary markets too, which were once dominated by developers. Total U.S. dollar issuance for China collapsed to $42.5 billion last year from pre-pandemic levels above $200 billion, data from Dealogic showed.
Still, even if Evergrande is dismantled carefully a lot of damage has been done and most investors do not want to touch the real estate sector, which once accounted for nearly a quarter of economic output, or indeed China until it is properly repaired.
