Evergrande misses overhaul proposal deadline amid talks with creditors

China Evergrande Group delayed releasing a much-anticipated restructuring plan again, missing a self-imposed deadline and disappointing creditors seeking to salvage investments.
The world’s most indebted developer has yet to announce its offshore debt-restructuring plans, falling short on its promise to do so by the end of 2022.
Evergrande didn’t immediately respond to a request seeking comment during non-business hours.
With about 1.97tn yuan ($286bn) of liabilities, the company is facing a winding-up lawsuit in Hong Kong, while sitting at the heart of a property crisis that’s triggered a flurry of defaults and caused home construction halts across the country.
Evergrande’s fate has broader implications for China’s $58tn financial system, and could send ripples across banks, trusts and millions of home owners. It would likely be among the country’s biggest-ever restructuring efforts. The sheer size has left investors worried that any collapse may spark financial contagion and curb growth in the world’s second-largest economy, which depends on the housing market for about a quarter of gross domestic product.
The company previously failed to come up with a “preliminary restructuring plan” it promised by the end of July. It met with an ad-hoc group of its dollar bondholders in early December to formally discuss a proposal, Bloomberg reported earlier.
It expected to receive support from offshore creditors by the end of February or early March, the developer’s legal representative said during a winding-up hearing in late November. Evergrande was urged by the judge of winding-up case to present “something more concrete” during the next hearing on March 20.
China’s home sales continued to slump in December, underscoring the challenge to reverse the property downturn amid Covid outbreaks.
The 100 biggest real estate developers saw new home sales drop 30.8% from a year earlier to 677.5bn yuan ($98.2bn) in December, according to preliminary data from China Real Estate Information Corp. That compared with a 25.5% decline in November.
The declines came a month after policy makers unveiled a sweeping plan to rescue the sector, focusing mainly on the supply side by easing financing to developers. Those efforts however have been offset by surging Covid infections.
“As the peak of the Covid outbreak hasn’t passed, the economic recovery remains very weak and homebuyers’ income outlook hasn’t recovered,” Chen Wenjing, associate research director at China Index Holdings, said on Thursday. “We expect home sales to recover in the second quarter at the earliest.”
China’s vice premier has hinted at providing further policy support, describing the sector as a “pillar” of the economy in a rare instance.
China abruptly ended its Covid Zero policy about a month ago. Nearly 37mn people may have been infected on a single day in December, making the country’s outbreak by far the world’s largest, Bloomberg reported, citing estimates from the government’s top health authority.