From Gina Lee
Investing.com – China Evergrande The group's shares rose despite the suspension of mortgages for buyers of the company's unfinished homes in the city and pressure on founder Hui Ka Yan.
Evergrande's shares in Hong Kong (HK 🙂 rose 9.25% to HK $ 7.91 ($ 1.02) by 12:30 a.m. ET (4:30 a.m. GMT), despite offshore bonds maturing in 2025 at $ 1.02 .6 cents against the dollar to 46.8 cents towards a. fell record low at 9:37 p.m. ET.
HSBC holdings Plc (LON :), the Hong Kong unit of Bank of China Ltd., Bank and Bank of East Asia (OTC 🙂 were reportedly among the lenders who put new mortgages on two Evergrande projects under construction. The Industrial & Commercial Bank of China (OTC 🙂 (Asia) should also be on the list.
"It's pretty clear that the market has already lost confidence as measured by stock and bond prices," Jennifer James, emerging market debt portfolio manager for Janus Henderson Investors, told Bloomberg.
"The company still has options, however," said James, who has a "small" position in Evergrande bonds. "To restore confidence, they need to accelerate asset sales and / or attract a strategic investor."
Evergrande said in a statement Wednesday that its relationships with many Hong Kong banks mean local operations will not be affected. The developer remains confident that it can complete its Emerald Bay II development as planned in August 2021 and The Vertex (NASDAQ :), its second project in Hong Kong, is expected to be completed by the end of October 2021.
Other options currently open to the company include accelerating asset sales or securing a Chinese government bailout. The government has made efforts in recent years to curb moral hazard, but Evergrade could be a "too big to fail" case. Although the authorities have remained silent about their plans so far, they could step in to bring the chaos under control.
"Evergrande's liquidity is growing and under pressure from all fronts … sooner or later this could pave the way for some form of restructuring or debt extension talks," Michel Lowy, chief executive officer of SC Lowy, told Bloomberg.
On a positive note, earlier in the day the company said it had settled its litigation with China Guangfa Bank over an overdue loan of CNY 132 million, or $ 20.38 million, and that the two sides are working together will deepen.
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