China Evergrande’s snowballing debt crisis
China’s most indebted property developer Evergrande Group (3333.HK) is set to accelerate asset sales, amid increasing signs that policymakers are stepping in to avoid a hard landing for a company deemed too big to fail.
Here is a timeline of events leading to its debt crisis and what the firm has done to raise funds so far:
Evergrande vows to cut its debt for the first time, aiming to slash net gearing ratio to 70% by June 2020 from 240% in June 2017.
The central bank names Evergrande in a report as one of the few financial holding conglomerates on its watch that it says could cause systemic risk.
Evergrande targets cutting its debt by 150 billion yuan ($23.17 billion) annually for three years.
Regulators meet with 12 major property developers, including Evergrande, in Beijing to introduce caps for three different debt ratios in a pilot scheme, dubbed “the three red lines”.
Evergrande sells 28% of its property management unit for $3 billion in a pre-IPO deal.
It pledges in a letter to the Guangdong provincial government to approve a Shenzhen backdoor listing plan that has languished for four years, warning it would face a cash crunch that could lead to systemic risks.
Company offers 30% discount on properties for a month to push sales.
It raises $555 million in a slimmed-down secondary share sale in Hong Kong.
It terminates the Shenzhen backdoor listing plan and strikes an agreement with some strategic investors not to demand repayment.
Evergrande Property Services Group’s (6666.HK) Hong Kong IPO raises $1.8 billion.
Electric vehicle unit China Evergrande New Energy Vehicle (0708.HK) raises $3.4 billion by bringing in six new investors.
Evergrande sells 10% of its online real estate and automobile marketplace Fangchebao to 17 investors for $2.10 billion in a pre-IPO deal.
It targets to meet all three caps on debt ratios by the end of 2022, and lays out plan to list Fangchebao by early next year, and spin off other units including spring water and tourism.
Evergrande says it will sell over half of its 58% stake in smaller peer Calxon (000918.SZ), worth $386 million.
Fitch downgrades Evergrande to ‘B’ from ‘B+’ with a negative outlook.
The developer arranges HK$13.6 billion ($1.75 billion) to repay a maturing bond and interest on all other dollar bonds, and it says it will have no further bonds due before next March.
Evergrande achieves one of the debt ratio caps set by regulators, by cutting its interest-bearing indebtedness to around 570 billion yuan, from 716.5 billion yuan six months ago.
A court orders a freeze on a 132 million yuan bank deposit held by Evergrande at the request of China Guangfa Bank Co [RIC:RIC:GDDVB.UL]. Evergrande says the loan is not due until next March and it plans to take legal action.
Some banks in Hong Kong decline to extend new loans to buyers of two Evergrande’s uncompleted residential projects.
Evergrande scrapes a special dividend proposal. S&P cuts its ratings on the company by two notches to B- from B+ with a negative outlook.
Fitch downgrades Evergrande to “CCC+” from “B”.
Evergrande agrees to sell stakes in its internet unit HengTen Networks Group Ltd (0136.HK) worth a total of HK$3.25 billion.
Moody’s downgrades Evergrande’s corporate family rating (CFR) by two notches to “Caa1” from “B2”.
Legal sources say lawsuits against Evergrande across the country will be centrally handled by the Guangzhou Intermediate People’s Court.
S&P downgrades Evergrande again by two notches to “CCC” from “B-“.
The company says it is in talks to sell certain assets, included stakes in Evergrande New Energy Vehicle and Evergrande Property Services.
State media reports construction work has been halted on two Evergrande projects in Kunming, one of them for overdue payments and the other was scheduled to deliver to homebuyers in October.
Hui Ka Yan steps down as chairman of flagship unit Hengda Real Estate Group which Evergrande says is due to the termination of the backdoor listing plan.
China’s central bank and banking watchdog summon Evergrande’s senior executives and issues a rare warning that the company needs to reduce its debt risks and prioritise stability.
Evergrande pledges to do everything it can to resolve its debt issues, and it will work to maintain the stability of the real estate market.
Evergrande issues an earnings warning, expecting as much as 39% drop in its first-half net profit.