Evergrande debt woes are 'manageable', says People's Bank of China

The spillover effect of China Evergrande Group's debt problems on the banking system is controllable, a central bank official said on Friday, in rare official comments on a liquidity crisis at the massive developer that has roiled global markets.

 

Chinese authorities are urging Evergrande to step up asset disposals and the resumption of projects, Zou Lan, head of financial markets at the People's Bank of China (PBoC), told a briefing, adding that individual financial institutions did not have highly concentrated exposure to Evergrande.

 

“In recent years, this company did not operate and manage itself well. It failed to conduct prudent operations according to changing market conditions, and it blindly diversified and expanded its business,” Zou told the briefing in Beijing. Chinese officials and state media have been largely silent on the crisis at Evergrande, which has missed a series of bond interest payments and has $300 billion in debt.

 

Another Chinese developer, Xinyuan Real Estate Co's, avoided a default on a maturing dollar bond on Friday, saying in a Singapore Exchange filing that bondholders had agreed to an offer to accept new bonds and cash in exchange for maturing notes.

 

Xinyuan said that holders of more than 90 per of the company’s $229 million notes due October 15 had agreed to the exchange, which would see it deliver new bonds worth $205.4 million and $19.1 million cash.