Evergrande admits that it cannot issue new debt; stocks sink

The actions of China Evergrande They plummeted as much as 24% on Monday after the embattled developer said it could not issue new debt due to an ongoing investigation into one of its subsidiaries, dealing a fresh blow to its restructuring plans.

“In view of the fact that Hengda Real Estate Group Co Ltdone of the company’s main subsidiaries, is being investigated, the group cannot meet the requirements for the issuance of new bonds under the current circumstances“Evergrande said in a statement late Sunday.

In August, Hengda Real Estate said it was being investigated by China’s securities regulator over suspected information disclosure violations.

This opens a new front for the world’s most indebted company, just a week after the police detained some employees of its wealth management unit, causing its shares to plummet and increasing pressure on the company’s plans. restructuring of Evergrande.

The actions of Evergrandewhich has more than $300 billion in liabilities, fell as much as 23.6% to HK$0.42, while the broader market fell 0.6%.

Earlier this month, Evergrande said it had delayed making a decision on restructuring its overseas debt from September to next month to give holders of its debt more time to consider its proposal.

Evergrande needs the approval of more than 75% of holders of each class of debt to approve the plan, which offers creditors a basket of options to exchange debt for new bonds and equity-linked instruments backed by their shares and those of their units listed in Hong Kong.

Prominent developers such as Country Garden Holdings remain on the verge of default, keeping homebuyer morale depressed and prompting Beijing to implement a series of measures to shore up the sector and stimulate real estate demand.

The crisis in the real estate sector, which accounts for about a quarter of the world’s second-largest economy, has shocked global markets, and Beijing’s measures to shore up the industry appear to have had little impact so far.

At the end of August, the total area of ​​unsold homes amounted to 648 million square meters (7 billion square feet), according to the latest data from the National Statistics Office (ONE).