Chinese State Council think tank meets with developers and banks, source says as debt problems escalate

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The Chinese national flag is seen in Beijing, China on April 29, 2020. REUTERS / Thomas Peter / File Photo

SHANGHAI / BEIJING, Nov. 9 (Reuters) – A powerful Chinese state council think tank met with real estate developers and banks in the city of Shenzhen, a source with direct knowledge of the meeting told Reuters. that concerns intensify in the face of a liquidity crisis in the country. real estate sector.

Attendees at the meeting, which took place on Monday, included China Vanke (000002.SZ), Kaisa Group (1638.HK), Ping An Bank (000001.SZ), China Citic Bank, China Construction Bank (601939.SS) and CR Trust, according to the source.

Investors worry about the spread of liquidity problems in China’s real estate sector, with a spate of overseas defaults, credit rating downgrades and massive sales of stocks and bonds by some developers over the past few weeks.

Struggling developer China Evergrande Group (3333.HK), which is at the center of the debt crisis, has rocked global markets as it grapples with liabilities of more than $ 300 billion, which, s ‘they are unmanaged, could present systemic risks to the Chinese financial system.

In the meeting with the State Council’s Development Research Center, Shenzhen-based Kaisa urged state-owned enterprises to help private enterprises improve their liquidity through project acquisitions and development. ‘strategic purchases, the source said.

Although the think tank makes policy proposals, it is not a decision-making body.

Kaisa, China’s 25th-largest developer in terms of sales, also said its liquidity was tight and faced significant challenges due to credit downgrades and bank lending limits, the source added.

The developer said some financial institutions improperly transferred funds from his accounts and he urged all lawsuits aimed at freezing his assets to be handled centrally by a court in Shenzhen.

Vanke, one of China’s top three developers, said at the meeting that his finances are sound, although he called for stable policies in an effort to avoid systemic risks and a shortage of liquidity.

Other companies in attendance were Southern Asset Management and developer Excellence Group, the source added.

Vanke, Kaisa and Citic Bank declined to comment. Excellence and the other banks that attended the meeting did not immediately respond to requests for comment.

The State Council’s Information Office also did not respond to a request for comment. The source declined to be identified due to the sensitivity of the case.

COMING DEADLINES

In a statement posted Monday night on his official WeChat account, Kaisa said he was taking action to resolve his liquidity issues and consulting with investors in wealth management products on better payment solutions.

Kaisa has the most offshore debt of all Chinese developers after Evergrande.

Some holders of offshore bonds issued by an Evergrande unit had not received the interest payments due on November 6 Monday evening in Asia. Read more

Twice in October, Evergrande narrowly avoided catastrophic defaults on its $ 19 billion bonds in international financial markets by paying coupons just before their grace periods expired.

One of those periods expires on Wednesday, November 10 for more than $ 148 million in coupon payments that were due on October 11. Evergrande is also due to make coupon payments totaling more than $ 255 million on its June 2023 and December 2025 bonds. 28.

Evergrande shares fell more than 1% on Tuesday.

Last week, Kaisa and three of its units had their shares suspended, a day after a subsidiary missed a payment to onshore investors, as China’s real estate debt crisis shakes other developers. Read more

Reporting by Shen Yiming, Cheng Leng and Tony Munroe; Written by Anne Marie Roantree; Editing by Kim Coghill and Muralikumar Anantharaman

Our standards: Thomson Reuters Trust Principles.


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