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China steps up funding oversight of Evergrande property projects - Caixin

Stock MarketsSep 26, 2021 12:45AM ET
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© Reuters. An Evergrande sign is seen at the Evergrande Automotive R&D Institute Headquarters of China Evergrande Group in Shanghai, China September 24, 2021. REUTERS/Aly Song/Files

BEIJING (Reuters) - Several local governments in China have set up special custodian accounts for property projects of its most indebted developer, Evergrande, to protect funds earmarked for housing projects from being diverted, media outlet Caixin said.

Reeling under $305 billion of debt, Evergrande missed a payment deadline on a dollar bond last week, and its silence on the matter has set global investors wondering if they will have to swallow large losses when a 30-day grace period ends.

The special accounts have been set up since late August in at least eight provinces where Evergrande has the most unfinished projects, the Chinese outlet said on Sunday, citing a source close to the developer's management team.

These include Anhui, Guizhou, Henan, Jiangsu and cities in the southern Pearl River Delta, it added.

The custodian accounts aim to ensure homebuyers' payments are used to complete Evergrande's housing projects, and not diverted elsewhere, such as to creditors, Caixin said.

In some southern cities, such as Zhuhai and Shenzhen, the offices of the housing regulator, the Ministry of Housing and Urban‑Rural Development, were also involved in overseeing and reviewing fund use by Evergrande's projects, it said.

Evergrande and the housing ministry did not immediately respond to requests for comment.

In recent months, the cash-strapped developer, which epitomises the borrow-to-build business model, has stopped repaying some investors and suppliers and halted building work at many projects across China.

The housing regulator has also set a Sept. 24 deadline for regional offices to report on the funding gaps facing Evergrande's unfinished projects, Caixin said, but it was not immediately clear if this had been met.

By the end of June, Evergrande still had 1,236 projects for sale, it said in a semi-annual report, including those completed and under construction.

Last week, the Wall Street Journal newspaper said Chinese authorities had asked local governments to prepare for a possible collapse of Evergrande, urging them to prevent unrest and mitigate ripple effects on the rest of the economy.

China steps up funding oversight of Evergrande property projects - Caixin
 

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Comments (7)
Todd Gray
Todd Gray Sep 26, 2021 12:33PM ET
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seems like all the news sources are owned by some faction. that means we never get honest news. just bias propaganda.
Dave Jones
Dave Jones Sep 26, 2021 7:13AM ET
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glad it's fixed
Aditya Jaiswal
Aditya Jaiswal Sep 26, 2021 5:05AM ET
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its a good news for CHY and it will definitely push USD back
cc cc
cc cc Sep 26, 2021 4:24AM ET
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if they start to protect small investors, Evergrande will not have access to liquidity. Will be close to collapse or debt restructuring which will ripple through the Asian region.
Tomek Mi
Tomek Mi Sep 26, 2021 3:10AM ET
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Gap up
Jayme Oliveira Jr
JJ__ Sep 26, 2021 2:19AM ET
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Everything in China is owned by PCC... I do doubt that PCC will let any payment default... it would spread quickly throughout Chinese economy.
Pranay Singh
Pranay Singh Sep 26, 2021 2:19AM ET
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So what you expect during opening tomorrow ?Shart drop or rise?
Edward Chong
Edward Chong Sep 26, 2021 2:19AM ET
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sharp rise.
William Bailey
William Bailey Sep 26, 2021 1:12AM ET
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I wonder if we are in a credit crunch … if so, assets will plummit
Pranay Singh
Pranay Singh Sep 26, 2021 1:12AM ET
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What you think on opening.I think should open higher?
Ronald Warren
Ronald Warren Sep 26, 2021 1:12AM ET
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Until something major actually happens, the market will go up. Algos ignore all negative information until the hammer comes down.
Pranay Singh
Pranay Singh Sep 26, 2021 1:12AM ET
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Sorry guys ,Can you help me in understanding this news.Is this positive or negative.
Empire Destroyer
Empire Destroyer Sep 26, 2021 1:12AM ET
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