According to Monash University’s Weiping He, an expert in financial markets regulation and company law, the Chinese government is probably helping Evergrande achieve the payment deadlines.
“The government’s hand could be at work here, with local banks being able to provide assistance,” she explained.
According to the government, “local enterprises, which are state-owned or otherwise privately-owned companies would also be encouraged to join in to support individual housing projects or subsidiaries to ensure that housing projects are fulfilled.”
It is Speculated That a Rescue From the CCP is Quite Improbable.
Several state-run companies in China have conducted preliminary research on Guangzhou real estate.
Evergrande’s Guangzhou FC Soccer Stadium and the adjoining residential developments are reportedly close to being acquired by Guangzhou City Construction Investment Group.
Costing an estimated 12 billion yuan ($A2.6 billion), the stadium will have enough seats for more than 100,000 fans, making it the largest stadium ever constructed specifically for soccer.
According to reports in foreign media, Evergrande’s billionaire founder and chairman Xu Jiayin may be personally liable for some of the company’s debt.
There have been rumours that Evergrande has used a home as collateral to acquire bank loans and has sold off private jets.
A search of Bloomberg’s Billionaire Index reveals that Xu has an estimated net worth of $7.2 billion (A$9.89 billion). However, the liabilities of Evergrande are almost 40 times that amount, thus Xu cannot save the company on his own.
To What does Evergrande Look Forward?
The fate of Evergrande is uncertain for the foreseeable future.
Ms He does not anticipate an outright default by Evergrande, but anticipating a gradual reorganisation as the most likely conclusion.
And yet, it will persevere. She continued, “Evergrande’s investors and creditors are likely at the bottom of the government’s to-do list.”
People who have paid a lot of money to purchase residential apartments from the corporation are a priority for the government.
That’s the official goal, so to speak. A problem with stability has arisen.”
More than $255 million (about $A350 million) in coupon payments are due from Evergrande on December 28.