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Is Evergrande on the Brink Of Collapse?

  • Uncategorized
  • Aug 11, 2021

According to some people, few Chinese banks that are not allowing credit to the China evergrande group are bringing concerns about the developer's financial health. Three banks which are having approximately USD 7.1 billion of credit exposure to evergrande and as the company's loan is maturing this year, the banks have decided not to renew any kind of loan to the company. These decisions were made before evergrande's bonds began tumbling. Financial functions are very confidential and much formulated because it needs to go from the different pipeline and so not everything can be done. It is said that three other banks are allowing evergrande to roll over some portions of the credit line it has successfully tapped, but it is putting some restrictions and clauses on it as it has to limit the company's access to any untapped credit from these lines.

People familiar with the matter said that some Chinese trust firms, which are evergrande's second-largest lender after banks, have also been reevaluating their exposure to the company.One firm is looking for the quality of the collateral backing the loans to lend. Another is looking at whether to release any new products tied to evergrande. Both companies are among the top 10 providers of trust loans to the developer. While the measures in and of themselves do not suggest that evergrande is immediately threatened by an impending liquidity crisis, but they do show that the company is facing increasingly tight options as it is searching for debt settlement options. The group is heavily reliant on bank financing even after some lenders took steps in the second half of last year to reduce their exposure of companies that include trusts accounted for about 81 percent of the 335.5 billion yuan in interest-bearing debt from developers due in 2021. According to its most recent annual report, when asked by Bloomberg on Monday, evergrande denied that the banks were limiting its access to finance and said that their dealings with all banks and financial institutions were healthy and normal, without providing any details. Some of ' 'evergrande's biggest lenders: China Minsheng Banking Corp., China Citic Bank Corp., Industrial & Commercial Bank of China, China Construction Bank, China Zheshang Bank, and Bank of China did not immediately respond to requests for comment. Billionaire Hui Ka Yan real estate giant announced plans in March to cut its debt roughly in half over the next two years and promised to end this month.