Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

Evergrande's debt revamp to provide roadmap on tackling China property crisis

Published Jul 25, 2022 03:56AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: The logo of China Evergrande is seen at China Evergrande Centre in Hong Kong, China December 7, 2021. REUTERS/Tyrone Siu/File Photo

By Clare Jim

HONG KONG (Reuters) - China Evergrande Group, the world's most indebted developer, is expected to announce this week a debt restructuring plan that will not only determine its future but also indicate how Beijing plans to overcome a deepening property sector crisis.

With more than $300 billion in debt, Evergrande has been at the centre of China's property quagmire since last year as the company struggled to repay suppliers, creditors, and investors in wealth management products after Beijing launched measures to control developers' high debt levels.

The liquidity squeeze at Evergrande, whose entire $22.7 billion worth of offshore debt including loans and private bonds is deemed to be in default, subsequently engulfed other Chinese developers as their credit conditions deteriorated, and drove several smaller firms to defaults.

Evergrande's eagerly anticipated offshore-debt restructuring plan, which China's formerly top-selling developer has said it will announce by end-July, is expected to serve as a template for its cash-starved peers.

"We're all waiting for Evergrande's proposal to get an idea of the terms and it'll set a benchmark," said a senior executive of a property developer who has done dollar-bond swaps and is currently in talks with advisers on a restructuring.

"No firms would want to be the first because that'd be tremendous pressure."

The restructuring proposal, though, will come at a time when China's macroeconomic conditions have deteriorated and the property sector is witnessing unprecedented challenges.

The world's second-biggest economy, of which the property sector accounts for a quarter, only narrowly missed a contraction in the second quarter.

Moreover, Beijing is scrambling to reassure homebuyers who are threatening to stop paying mortgages on unfinished housing projects, in rare protests that's set to spur a shakeout among developers.

Some offshore creditors of Evergrande told Reuters that there was still disagreement on how it should repay and reorganise the debt, which could result in a delay in implementing the restructuring.

But the developer's newly appointed CEO Siu Shawn told the 21st Century Business Herald late on Friday that the firm had reached basic consensus with several major offshore creditors on the principles and framework of the restructuring proposal.

Evergrande declined to comment.


Investors will also be closely watching the role the state will play in the restructuring proposal.

Evergrande began talks with its offshore creditors about a restructuring proposal earlier this year, after advisers for a group of dollar bondholders demanded more transparency from the developer.

Reuters reported in May, citing sources, that Evergrande was considering repaying offshore public bondholders owed around $19 billion with cash instalments and equity in two of its Hong Kong-listed units.

After unveiling the restructuring proposal, the firm aimed to reach consensus with its creditors on specific terms by the end of this year, a separate source told Reuters earlier this month.

In mainland China, Evergrande has been extending its debt repayment obligations, though creditors are growing impatient.

The developer's latest repayment extension proposal on a 4.5 billion yuan ($666.7 million) bond was voted down this month, while small suppliers, who are owed money, are also threatening to stop paying bank loans.

Evergrande also aimed to release a simple restructuring plan for its onshore debt as early as this week, financial information provider REDD reported on Friday.

Raymond Cheng, head of China and Hong Kong research at CGS-CIMB Securities, said Evergrande's proposal should also outline what it will do with its unsold projects and existing land bank, which would have a direct impact on the broader property market.

"Investors will not look at Evergrande's proposal solely from a company perspective, but also a macro perspective," said Cheng.

Evergrande's debt revamp to provide roadmap on tackling China property crisis

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email