As of: 09/29/2021 1:44 p.m.
The real estate giant Evergrande is selling a stake in a bank, bringing in more than a billion euros. This does not mean the all-clear for most of the creditors of the badly ailing group from China.
The heavily indebted Chinese real estate company Evergrande has raised more than one billion euros through a share sale. As the company announced, Evergrande has given its almost 20 percent stake in Shengjing Bank to the state-owned investment company Shenyang Shengjing for 9.99 billion yuan (equivalent to around 1.3 billion euros). This will make Shenyang Shengjing the bank’s largest shareholder.
However, the proceeds from the sale will probably not benefit the broad masses of Evergrande creditors. Because the proceeds are to be used to pay off debts that Evergrande has at Shengjing Bank.
Price jump in the downtrend
Evergrande shares reacted to the news with strong price gains. On the Frankfurt stock exchange, the paper temporarily gained 17 percent to 0.348 euros. However, the stock has seen a long downward trend. A year ago it was still trading around two euros.
Evergrande is groaning under a mountain of debt of more than $ 300 billion and has defaulted. Recently, the hope for government aid to rescue the ailing group for private investors rose.
What happens to international bonds?
For the time being, there was no information on an interest payment of $ 47.5 million on a foreign bond due today. Last week, the group allowed a similar payment deadline to pass without comment. However, there is a 30-day period after which Evergrande is officially in default.
Nevertheless, market observers fear that domestic and foreign creditors will not be treated equally. They are based on an agreement between Evergrande and domestic creditors on a bond in the local currency yuan last week, just before the payment deadline for a dollar bond expired.