Analysts say Evergrande is considering rescheduling that would include all of its offshore government and personal debt.

The ailing real estate developer, owed $ 300 billion in debt, also announced Tuesday that it would set up a risk management committee that will play a role in mitigating and eliminating risk for the company. The world’s most heavily indebted real estate developer is struggling to raise money to pay sellers and investors.

These developments lifted stocks from all-time lows as they rallied on Tuesday, although they lost strength thereafter. I’ve also jumped into the stocks of other Hong Kong listed real estate companies.

China has also placed more emphasis on loosening up the mindset. On Monday, the country’s central bank announced it would cut the reserve requirement ratio, or the number of money banks must hold in reserve, for the second time this year. This will free up 1.2 trillion yuan ($ 282 billion) to fuel the slow growth of the pandemic.

“It now looks like the restructuring of offshore government bonds and Evergrandes private debt bonds is about to happen,” said Martin Hennecke, chief investment and communications advisor for Asia at St. James’s Place.

According to Luther Chai of CreditSights, a subsidiary of Fitch Ratings, private debt obligations will include bonds from the Jumbo Fortune joint venture and the Journey View unit.

The developer of Evergrande still has to say whether he paid $ 82.5 million in interest – the 30-day grace period ended on Monday. However, analysts said it was unlikely to pay interest given the company’s restructuring plans. Evergrande said Friday that it “intends to actively work with offshore creditors to formulate a viable restructuring plan”.

However, this was the first time the company had formally missed its final interest payments for the eleventh hour within the grace period.

China is moving to political easing

Analysts said China’s move toward slower monetary policy would turn the ailing real estate market around.

“In particular … I think the rhetoric of Chinese politicians has changed a lot lately, with an emphasis on mitigation, including reducing the reserve requirement ratio, wider easing of restrictions on the real estate sector, a commitment to stabilize in 2022, and aiming for an economic one Support from various monetary policy instruments, ”said Hennecke.

China’s easing is particularly important given the government’s strong stance on debt relief and another real estate tightening that triggered the current crisis in the first place, Hennecke said.

“Perhaps more important than the RRR announcement, the PBOC statement was closely followed by a Communist Party Central Committee statement voting to stabilize the economy in 2022 and signaling the easing of some real estate restrictions,” said Rodrigo Catril. National Bank of Australia.

The real estate sector in China has been affected by the government’s debt-taking measures. Evergrande’s problems ended after the authorities introduced the “three red lines” policy last year. This policy limits a company’s debt with the company’s cash flows, assets, and capital levels. It began to haunt developers after years of growth that resulted in excessive debt.

Concerns over Evergrande’s massive debt have hit global markets amid concerns about its potential impact on the rest of China’s real estate industry or even the economy as a whole. As their debt crisis ended, other Chinese real estate developers began to show signs of pressure: some defaulted on interest payments, others on all of their debts.

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