China Central Bank Says Evergrande Debt Woes Are Manageable

PBOC Urges Speedy Asset Sales

At the Friday briefing, Zou stated that Evergrande should accelerate asset sales and resume project construction, for which the authorities will give financial assistance.

"Misunderstandings" have occurred with certain lenders According to Zou, the central bank's debt management measures have put financial constraints on some developers, since some new projects have been unable to get financing even after settling old debts.

"This strong short-term reaction is a typical market phenomenon," he explained.

Before the end of the month, Chinese developers will owe more than $500 million in coupon payments on their high-yield bonds. According to Refinitiv data, Kaisa Group Holdings and Fantasia Holdings have coupon payments due this weekend.

"Property values rose too quickly in several areas, limiting the approval and issuance of personal mortgages," Zou added, referring to the first three quarters of this year.

"Once property prices stabilize, mortgage supply and demand in those cities will normalize as well," he added.

Fresh Setbacks

Despite this, sources told Reuters that Chinese state-owned Yuexiu Property has dropped out of a potential $1.7 billion agreement to acquire Evergrande's Hong Kong headquarters building due to concerns about the developer's precarious financial position.

Evergrande has been trying to sell assets to repay creditors who have been knocking on its door, and it has missed three rounds of interest payments on its foreign debts, and the failure of the discussions demonstrates the problems it is experiencing.

To add to its troubles, Hong Kong's audit regulator said on Friday that it was looking into Evergrande's 2020 accounts and PwC's audit of them because it was concerned about the adequacy of reporting on whether it could continue to operate as a going concern.

Following the Reuters story, Evergrande bonds dropped. According to data source Duration Finance, the company's 8.75 percent June 2025 bonds have dropped more than 6% and now trade at a discount of more than 80% to its face value.