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Chinese lenders have sued China Evergrande over payments in excess of $ 13bn which they say were delayed, as domestic companies incurred debt and competition from competitors against bond holders to repay.
A Chinese court that has ruled in favor of Evergrande has acquitted 367 cases of Rmb84bn ($ 13.2bn), according to a government report released by the Financial Times. The statement was made between August 24 and December 9, when the group was said to be in “prohibited instability”By Fitch Ratings.
Investigators say the timing of the report shows that mortgage lenders have lost confidence in the demise of Evergrande, the world’s most prosperous country, to repay its debts before it happens.
“Creditors are rushing to take Evergrande to court to repay their debt if they repay the loan,” said Bo Zhuang, a Singaporean researcher at Loomis Sayles, an asset manager. “This is especially true if not all lenders are treated equally.”
Debt settlement began with the central bank rebuke Evergrande’s management in August due to its debt crisis, which led to the collapse of the group’s business and restricted access to finance. A few days later, Evergrande he warned that he was in danger of infidelity.
Evergrande also reported sales of Rmb15.3bn in the three months to November 30, according to CRIC, a Shanghai-based consultant, compared to Rmb228bn in the same period last year.
Evergrande’s revelation has taken place global markets have shaken and raised concerns about the growing economic downturn, leading to the second global economic growth.
In August 2020, Beijing was released additional strict limits known as the “three red lines” that led to more money in real estate companies in the country.
Officials warned state banks not to help people with high incomes such as Evergrande, but instructed them to provide loans to small, non-debtors in order to alleviate the problems facing real estate agents. These companies are estimated to account for one third of the country’s gross domestic product.
“There is no way we can repay most of the debt we have,” said the Evergrande official, who asked not to be identified. “We allow judges to decide who is paid and how much.”
Evergrande has also issued $ 19bn offshore bonds. Lenders around the world will be competing with homeowners for a mortgage loan.
State banks have been lending the most aggressive loans to Evergrande. More than 40 lenders, ranging from China’s “four major” banks such as the Agricultural Bank of China to small regional lenders, repaying debts that were close to Rmb22bn, according to court records.
The state policy adviser said the visibility of the banks was worse than they used to be because many were delaying the release of potential damages from Evergrande in court. “The collapse of Evergrande will greatly affect China’s economy,” the adviser said.
Government construction groups are demanding Rmb16.4bn from Evergrande, prompting the government to ensure that the group performs well. existing works have been completed. Many of these items have been funded by prepaid mortgages.
“We will not be able to continue the construction work if our workers have not been paid for several months,” said the head of Hefei Construction and Engineering Group in central Anhui, which is suing Evergrande for Rmb229m.
Shadow lenders, including reputable companies and manufacturers who have borrowed money from Evergrande at a high interest rate, are also struggling to repay their loans.
According to court documents, 19 of these cases are “secret loan disputes” involving non-traditional creditors including hotels, metal dealers and pharmaceutical companies.
An Evergrande lending expert at shadow banks said the producer and his corporations began turning to private loans – some with an annual interest rate of up to 73 percent – from local businesses with large sums of money in April. “Evergrande had missed some alternatives,” the man said.
As the debt grows, so do debtors the uncertain hope of recovery. The central government has enacted laws relating to restructuring of institutions but political factors, such as the interference of local governments, affect the process.
“The most important thing for government officials is to ensure that all Evergrande operations are carried out [in their city] It has been completed and the lender is being paid, “said an Evergrande borrower to the shadows.
Additional reports of Xinning Liu in Beijing, Tom Mitchell in Singapore and Andy Lin in Hong Kong
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