BEIJING – The embattled Chinese real estate company Evergrande, which has already defaulted on one of its many bonds this year, says it “missed another payment deadline” on Friday.
In a statement posted on its website, the company said it received letters from the second-largest bond insurer in China, SinoCrest Guaranty, stating that Evergrande should not be issued any more new bonds.
The statement also said SinoCrest assured Evergrande that it would monitor the company’s financial condition and be ready to take “appropriate action” if there was a serious default.
The bond insurance firm is a big part of Evergrande’s debt, which stands at $11.5 billion. Evergrande said on Friday it received several other letters from SinoCrest, which means those other companies will be cutting off Evergrande’s access to a steady stream of funding.
Evergrande has had problems raising money for some time now. In the first quarter of 2016, it drew $1.6 billion in private loans from 26 banks and other financial institutions, according to its website. Most of the loans were classified as short-term, which means the company must repay the money by Sept. 30.
It has also missed out on financing deals. For instance, it recently struck a deal with China Telecom, reportedly for as much as $1.3 billion. However, China Telecom was unwilling to give Evergrande the money until the Chinese real estate firm could resolve its debt situation, a person familiar with the matter told Bloomberg News.
Evergrande, which had revenues of $38.9 billion in 2016, is one of China’s top developers, with plans to push into property outside China. It has also garnered notoriety by working to deceive investors about the strength of its finances. Earlier this year, it warned that it had missed a payment to a bondholder. In a subsequent public statement, it expressed concern about its ability to repay the money.
“This is not the first time that Evergrande Group has broken its promises to the market,” Elliot Li, a Hong Kong-based analyst at JPMorgan Chase, said in a note published Tuesday.
Evergrande’s financial woes have created financial problems for borrowers and people doing business with the company. A worker surnamed Song told the South China Morning Post that he put in at least 30 hours of overtime last week at the Evergrande main office in Nanshan district, Shenzhen, to complete the refurbishment of the new project he was building. If Evergrande defaults, he said, it might not pay him.
Evergrande’s troubles highlight the problems facing many Chinese companies. Many are raising short-term loans from banks and other lenders in the primary market, putting more pressure on the financial institutions.
Although corporate debt remains under control overall, Evergrande’s public woes suggest the Chinese government is increasingly wary of the country’s debt-fueled economic boom.
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