The real estate group China Evergrande, groaning under a huge debt burden, has warned of liquidity and default risks. These threatened if the country's second largest real estate developer did not succeed in resuming construction, selling holdings and renewing loans. If these measures were not implemented, the liquidity problems could worsen, which could lead to loan defaults and legal disputes, the group warned on Tuesday in a message to the stock exchange.
Stockbrokers fear that loan defaults by the large corporation could put a strain on the entire banking system in China. According to industry observers, there are now clear signs that the authorities are stepping to avoid a hard landing on Evergrande, fearing the “social impact” of a collapse.
The documents filed with the exchange revealed for the first time that Evergrande had sold real estate to settle outstanding billions in payments.
The loan liabilities last amounted to the equivalent of around 75 billion euros, after around 94 billion euros at the end of 2020. For the first half of the year, Evergrande reported an increase in net profit of 120 percent to the equivalent of 1.88 billion euros.
Including the minority holdings, however, the profit was around 30 percent below the previous year's figure due to losses in the real estate business.
Evergrande shares closed 0.7 percent lower on Tuesday before the news was announced in a friendly market environment.