What moves around Evergrande
Hopson Development could buy a division of Evergrande, the Chinese real estate group at risk of default, for 5 billion dollars. Meanwhile, another company in the sector, Fantasia, missed a payment of over 200 million
The Chinese real estate company Hopson Development – led by Zhu Mengyi, a very reserved man to the point of being described as an "invisible tycoon" – intends to buy a division of Evergrande.
Evergrande, one of the largest real estate development groups in China, has a debt of 305 billion dollars and it is feared that if it fails to pay off its liabilities, it could collapse and "infect" not only the Chinese economy, but even global markets.
THE PURCHASE AGREEMENT
Hopson Development's plans include the purchase of a 51 percent stake in Evergrande's property services unit, called Evergrande Property Services Group, at a price of more than 40 billion Hong Kong dollars (about 5 billion dollars). United States).
Financial transactions on the Hong Kong Stock Exchange on Evergrande, its subsidiary Property Services Group and Hopson Development have been suspended.
WHAT ANALYSTS THINK
Analysts are seeing in the possible deal confirmation that Evergrande is looking to repay its creditors. Ezien Hoo, who works for OCBC Bank, told Reuters, for example, that the sale of an asset “means that [in Evergrande] they are still trying to raise money to pay their bills. It seems that the property management unit is the easiest to give up in the grand scheme of things ”.
T-Commodity, a commodity consultancy founded by Gianclaudio Torlizzi, thinks Evergrande is "too big to fail" and had foreseen a spin-off of its assets and their re-division among various Chinese real estate development companies, rather than a massive intervention state rescue.
Evergrande's external debt amounts to nearly $ 20 billion. On Wednesday he was due to honor a $ 47.5 million payment on bond interest; it did not even pay the previous 83.5 million dollar coupon.
WHAT HAPPENS TO FANTASIA
The Evergrande case will not be China's "Lehman moment": it is a comparison – the one with the American bank Lehman Brothers, whose failure contributed to the global economic crisis known as the Great Recession – which is often mentioned, but which does not convince analysts .
But the Evergrande crisis is putting pressure on the Chinese real estate sector. Another company, Fantasia, missed the due date on a $ 206 million payment yesterday, despite saying it has "no cash flow problems."
It is a small company with a market value of $ 415 million. But its non-payment feeds the fears of those who fear the collapse of a sector that is worth about a quarter of China's economy.
According to the forecasts of the rating agency Fitch, by the end of the year Fantasia will have to repay international bonds of almost 2 billion dollars and local bonds of almost 1 billion.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/evergrande-hopson-development/ on Tue, 05 Oct 2021 09:21:46 +0000.