China's Evergrande resumes work on more than 10 projects

Beijing

CHINA Evergrande Group said on Sunday (Oct 24) that it had resumed work on more than 10 projects in six cities including Shenzhen - a statement that comes after it appeared to avert default with a last-minute bond coupon payment recently.

Evergrande, deep in crisis with more than US$300 billion in liabilities, has not disclosed how many of its 1,300 real estate projects across China it has had to halt work on.

The company said on Aug 31 that some projects were suspended because of delays in payment to suppliers and contractors and it was negotiating to resume building.

On Sunday, it said in a post on its Wechat account that some of the projects it had resumed work on had entered the interior decoration stage while other buildings had recently finished construction.

Evergrande added that its efforts to guarantee construction would shore up market confidence and included several photos of construction workers on different projects, stamped with the time and date.

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China's second-largest property developer last month also promised potential buyers that it will complete the building of their homes and said that work on one of the world's biggest soccer stadiums in the southern city of Guangzhou was proceeding as planned.

Last week's move to pay US$83.5 million in interest on a US dollar bond has bought Evergrande another week to wrestle with a debt crisis looming over the world's second-biggest economy.

That brought relief for investors and regulators worried about the fallout for global markets and added to reassurances from Chinese officials that creditors would be protected.

Still, the world's most indebted property firm - with more than US$300 billion in liabilities - needs to make payments on a string of other bonds, with the next major deadline to avoid default on Oct 29. With little known about its ability to pay and property sales tumbling 30 per cent in the last 12 months, there is deep scepticism over Evergrande's capacity to ride out the crisis.

Highlighting the stresses on its core business, Evergrande also announced last Friday plans to give future priority to its electric vehicles business over real estate.

Evergrande's new vehicle business, founded in 2019, has yet to reveal a production model or sell a single vehicle. Last month, the unit warned that it was still seeking new investors and asset sales, and that without either it might struggle to pay salaries and cover other expenses.

Evergrande's woes have reverberated across the US$5 trillion Chinese property sector, which accounts for a quarter of the economy by some metrics, with a string of default announcements, rating downgrades and slumping corporate bonds.

Its debt crisis is also being widely watched by global financial markets concerned about broader contagion. REUTERS