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Heavily indebted Chinese property giant Evergrande Group on Sunday announced it had suffered fresh losses for the first half of the year. economy news
The developer’s January-June losses amounted to 33 billion yuan ($4.53 billion), compared to 66.4 billion yuan in the same period last year, according to a statement published on the Hong Kong Stock Exchange website.
Once China’s top developer, Evergrande is drowning in a sea of debt and has become a symbol of the property crisis that continues to send shudders through the world’s number two economy.
Its statement on Sunday also announced dwindling liquidity, with just $556 million in cash assets, compared to about $2 billion last year.
The situation is likely to complicate its repayments over the coming months.
Evergrande first defaulted on its bonds in 2021, fanning fears of a possible global contagion.
It estimated its liabilities now stand at almost $328 billion, down from nearly $340 billion at the end of 2022.
In April, Evergrande said it had entered into a restructuring agreement with a group of international creditors, in what could be a breakthrough deal towards easing the developer’s massive debt.
The plan offers creditors a choice to swap their debt into new notes issued by the company and equities in two subsidiaries, Evergrande Property Services Group and Evergrande New Energy Vehicle Group.
Attempts to stabilise sector
The property sector, which along with construction accounts for about a quarter of China’s GDP, is a key pillar of the country’s growth.
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Housing reforms during the late 1990s unleashed a boom in the real estate sector, spurred by social norms that consider owning property a prerequisite for marriage.
But the massive debt accrued by the industry’s biggest players has been perceived by Beijing in recent years as an unacceptable risk for China’s financial system and overall economic health.
To reduce the sector’s indebtedness, authorities have gradually tightened conditions for developers’ access to credit since 2020, and a wave of defaults followed — notably that of Evergrande.
Over the summer, developers triggered protests and mortgage boycotts from Chinese homebuyers after failing to deliver housing projects.
Beijing has sought to bolster the sector by cutting mortgage rates, slashing red tape and offering more loans to developers.
Fellow Chinese property giant Country Garden now risks defaulting on its bond payments next month, after the company said there were “major uncertainties in the redemption of corporate bonds”.
Evergrande shares are due to resume trading on the Hong Kong Stock Exchange on Monday.
They were suspended in March 2022, when the beleaguered company failed to publish its results for 2021.
The annual results for 2021 and 2022 were published last month, and they have also been audited, paving the way for trading to resume.
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