Evergrande Under the Radar

Markets outside of Hong Kong seem to be ignoring this news.

FT: Evergrande bond trading halted on reports of cash crunch

Trading in onshore bonds of China Evergrande, the world’s most indebted developer, was halted after reports it was seeking government help to stave off a cash crunch caused the price of its shares and debt to tumble.

Shanghai’s stock exchange suspended trading in Evergrande bonds for half an hour on Friday morning, citing “abnormal fluctuations”. Their prices plunged from just under Rmb90 ($13.19) to finish trading at Rmb74, compared to their par value of Rmb100.

Evergrande’s shares and debt prices dropped after a letter, purportedly from the company, circulated on Chinese social media on Thursday requesting support for a previously planned reorganisation from the provincial government in Guangdong, where Evergrande is based.

I searched and saw a link broken for news, but this came up from Sina: 中国恒大集团：截至2020年6月30日现金余额人民币2046亿元

China Evergrande Group: As of June 30, 2020, the cash balance is RMB 204.6 billion

Reuters: Evergrande's too-big-to-fail bind comes to a head

Evergrande beseeched officials in its home province of Guangdong for assistance with a so-called back-door listing, according to a copy of the Aug. 24 letter, whose authenticity was confirmed by Reuters sources. The idea, first proposed as part of an October 2016 restructuring, was for subsidiary Hengda to combine with a publicly traded state developer. If the deal doesn’t happen by January 2021, a group of investors can demand repayment of some 144 billion yuan, or about $21 billion, all of Evergrande’s cash as of June 30.

The letter suggests a private sense of concern that Evergrande rarely exhibits in public. Chairman Hui Ka Yan often provides a helping hand to Beijing, supporting national goals such as poverty alleviation, even as its own debt load has surpassed $100 billion. Evergrande shares tumbled by as much as 6% on the news. S&P Global cut its outlook on the credit rating to negative from stable. The Shanghai Stock Exchange temporarily suspended trading in two of the company’s bonds on Friday.