Business & Investment

China strengthens funding oversight for Evergrande real estate project

© Reuters. The Evergrande sign will be seen on September 24, 2021 at the Evergrande Automotive R & D Institute headquarters in the China Evergrande Group in Shanghai, China. REUTERS / Aly Song / Files

Beijing (Reuters)-Several local governments in China have special custodians for the real estate project of Evergrande, the most debt-ridden developer, to prevent the diversion of funds allocated to housing projects. He has set up an account, said Kaishin of Media Outlets.

Evergrande is in debt of $ 305 billion and missed the due date for dollar bonds last week. The silence on this matter has wondered if global investors need to swallow big losses at the end of the 30-day grace period.

China’s outlets said Sunday that special accounts had been opened since late August in at least eight states where Evergrande has the most unfinished projects, citing sources close to developer management.

He added that these include cities in Anhui, Guizhou, Henan, Jiangsu, and the southern Pearl River Delta.

Custodian accounts are intended to prevent homebuyers’ payments from being used to complete Evergrande home projects and diverted to other locations such as creditors.

In some southern cities such as Zhuhai and Shenzhen, the office of the Ministry of Housing, Urban and Rural Development, a housing regulator, also said it was involved in monitoring and reviewing the use of funds for the Evergrande project.

Evergrande and the Ministry of Housing did not immediately respond to requests for comment.

In recent months, underfunded developers, who symbolize the debt-to-construction business model, have stopped paying back to some investors and suppliers, and have stopped construction work on many projects across China.

Housing regulators also set a September 24 deadline for local offices to report on the funding shortfalls facing Evergrande’s unfinished projects, Kaishin said, but whether this was achieved. Was not immediately clear.

By the end of June, Evergrande still had 1,236 projects on sale, as stated in its semi-annual report, including projects completed and under construction.

Last week, the Wall Street Journal said Chinese authorities urged local governments to prepare for the possibility of an evergrande collapse, prevent anxiety and mitigate spillover effects on other parts of the economy. ..

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China strengthens funding oversight for Evergrande real estate project–caixin-2626605 China strengthens funding oversight for Evergrande real estate project

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