Debt Crisis: China Evergrande group to sell stock as deadline passes
A major shareholder in China Evergrande Group plans to sell all of its stock in the ailing Chinese real-estate developer, potentially incurring losses of more than $1 billion in the process.
Chinese Estates Holdings Ltd., which is controlled by Hong Kong billionaire Joseph Lau and his wife, Chan Hoi-wan, said Thursday it had recently pared its stake in Evergrande to about 5.7% from nearly 6.5%, and it was seeking shareholder approval to potentially sell the remainder.
China Evergrande agreed to settle interest payments on a domestic bond on Wednesday, while the Chinese central bank injected cash into the banking system, temporarily soothing fears of imminent contagion from the debt-laden property developer.
Evergrande (3333.HK), Asia’s biggest junk-bond issuer, is so entangled with China’s broader economy that its fate has kept global stock and bond markets on tenterhooks as late debt payments could trigger so-called cross-defaults.
Evergrande is scrambling to avoid defaulting on a number of bonds with payments due this week and its main unit, Hengda Real Estate Group, said on Wednesday it had “resolved” one coupon payment due on Thursday on its Shenzhen-traded 5.8% September 2025 bond , via “private negotiations”.
It did not specify how much interest would be paid or when, nor did Hengda mention Evergrande’s other pressing debts, leaving it unclear what this means for $83.5 million in dollar bond interest payments due on Thursday.