China Evergrande Investors Relax Despite Default Deadline

HONG KONG — For months, as a troubled property company called China Evergrande spooked global markets with its financial problems, Beijing sat on the sidelines.

Now, the government is taking a more hands-on role.

Evergrande, the world’s most indebted property developer, said officials from several state-backed institutions had joined a risk committee that would help the company restructure itself. The committee, led by Evergrande’s founder, Xu Jiayin, will “play an important role in mitigating and eliminating future risks,” the company said in a filing late on Monday.

The formation of a committee with an apparent government imprimatur reassured investors who had worried about the potential impact, in China and beyond, of a chaotic Evergrande collapse. Its huge real estate empire includes millions of apartments in hundreds of Chinese cities, but Evergrande also has more than $300 billion in obligations it needs to pay back — and perhaps even more off the books.

“It looks like the government will intervene in some way to avoid a large crisis,” said George Yu, an economist at Renmin University in Beijing. “But the whole society should learn a lesson from this incident.”

Evergrande appeared to have missed payments to some of its bondholders of an affiliated company, Scenery Journey, that had been due on Monday. But its shares rose in Hong Kong trading on Tuesday as investors reacted to news of official backing for the company and broader measures to support an ailing property sector. Investors were also cheered by the Chinese government’s loosening of lending restrictions on Monday amid signs of broader economic slowdown.

Article source: https://www.nytimes.com/2021/12/07/business/china-evergrande-kaisa-property.html