Chinese authorities scramble for ‘managed implosion’ as Evergrande default looms

Chinese authorities scramble for ‘managed implosion’ as Evergrande default looms

The Chinese government has so far avoided any direct bailout leaving Evergrande to try to find the money through sales of assets and even the company’s chair Hui Ka Yan’s own pockets.

Assessing the situation S&P said: “(Evergrande) does not seem to be making much progress in resuming construction, given its difficulties
in obtaining new financing.

“That will likely continue to drag on the company’s contracted sales, the biggest and the most important cash inflow item for any Chinese developer.

“In addition, the asset disposals Evergrande has executed so far are not sufficient to cover its huge maturities.”

Mr Botham suggested we were now seeing: “The final stages of the firm’s managed implosion.”

He predicts that management is likely to take the form of state-owned developers taking over Evergrande’s construction projects with the property sector as a whole falling increasingly under state control.

Published at Tue, 07 Dec 2021 17:10:51 +0000