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IPFS News Link • China

World holds its breath as Chinese property titan Evergrande teeters on the brink of collapse

• By DAILY MAIL CITY & FINANCE REPORTER

The Chinese property giant is understood to be on the brink of collapse with Asian and Western banks braced for the largest default since Lehman Brothers went bust in 2008.

Evergrande, which has debts of more than £300billion, has been struggling to meet debt repayments since September. Much of the money is owed to firms outside China.

A spokesman said on Friday after markets closed: 'In light of the current liquidity status, there is no guarantee that the group will have sufficient funds to continue to perform its financial obligations.'

As trading resumed yesterday, shares tumbled to an all-time low, closing down nearly 20 per cent. The have lost 88 per cent of their value since the beginning of the year.

The statement prompted Chinese officials to step in, sending a team to the company's offices, while founder Xu Jiayin has been called before the Communist Party.

Analysts believe the group is moving closer to default.

Conita Hung, investment director at Tiger Faith Asset Management, said the latest statement suggested the company was going to 'surrender and need help'. 'This sends a very bad signal,' she added.

Lenders with direct exposure to Evergrande include UBS and Royal Bank of Canada's Bluebay Asset Management. Money manager Blackrock also holds the debt.

Asia focused HSBC and Standard Chartered do not hold Evergrande debt directly but could still face difficulties given their huge presence in the Chinese and Hong Kong property market.

Karl Clowry, at law firm Addleshaw Goddard, said: 'Until there is a further announcement everybody is waiting to see if this time will be the first real trigger event.'


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