Shanghai, China, Dec 6 (EFE).- Shares of the world’s most indebted real estate developer China Evergrande Group fell more than 12 percent to their lowest level since mid-2010 on Monday after the company announced it may not be able to meet all its debt repayments.
The drop in the shares came as it faced the end of a 30-day grace period to pay a total of $82.5 million in coupons on two offshore bonds due on Monday.
After weeks of relative calm for the conglomerate, alarms sounded on Friday night after Evergrande said in a statement that “there is no guarantee that the Group will have sufficient funds to continue to perform its financial obligations” amounting to approximately $260 million.
The property developer also expressed its “plans to actively engage with offshore creditors to formulate a viable restructuring plan of the Company’s offshore indebtedness for the benefit of all stakeholders.”
The group’s announcement of a possible debt default comes amid a liquidity crisis, caused in part by the restrictions that Beijing has imposed on access to bank loans for the most indebted developers.
Shortly after the release of the statement, the authorities of the southeastern province of Guangzhou, where the company is based, announced that they would assign a working group to Evergrande to resolve its risks effectively.
The People’s Bank of China issued a statement saying that the Evergrande’s risk was mainly caused by poor management and over-expansion, and that the short-term risks of an individual developer will not impact the middle-to long-term financing in the market.
China’s banking and insurance regulator also emphasized that the developer’s spillover risk was controllable. EFE