The international credit rating agency Standard & Poor’s announced on July 26 that it had downgraded the ratings of China Evergrande, Evergrande Real Estate and Tianji Holdings to negative.
Moody’s, another international credit rating agency, also downgraded China Evergrande’s rating to B2, while the domestic China Chengxin International adjusted China Evergrande’s rating outlook to negative on July 27 following S&P.
In response, Evergrande said that it deeply regrets and does not understand it.
However, from the current experience of Evergrande, it is true that there are still a lot of risks in Evergrande’s debt crisis.
Even if Evergrande does its utmost to repay the debt, the high debt ratio left in the era of high leverage is like a malignant tumor that accumulates over time. It will be difficult to remove in a short period of time without undergoing scraping.
At the beginning of this month, Evergrande was frozen 130 million funds due to a “civil statutory letter” issued by China Guangfa Bank. Once this news was exposed, it caused a strong reaction from the capital market. Evergrande is one of the four largest listed companies, and its share price plummeted.
Is Evergrande out of money?
After a brief reconciliation, Evergrande and China Guangfa Bank reconciled at the speed of light. China Guangfa Bank issued a reconciliation notice, expressing its continued support for the development of Evergrande.
The Evergrande debt crisis provoked by China Guangfa Bank has come to an end, and Evergrande’s share price also got a certain degree of correction that day.
Jia Yueting, who is far away in the United States, successfully promoted Faraday Future’s listing on Nasdaq in the United States, and made Evergrande Motors, which holds 20% of Faraday Future’s shares, once again sought after by investors, and the stock price rose by 20% that day.
However, these cannot reverse the decline of Evergrande’s listed companies. In general, Evergrande’s listed companies have suffered a sharp decline in market value this year. Among them, China Evergrande will lose nearly 70% of its market value in 2021.
In the face of these successive debt crises, Evergrande has always been in a panic situation of pushing the gourd down again and again.
After reaching a settlement with China Guangfa Bank, Evergrande ushered in a new debt crisis. Moreover, this time the debt crisis is not a single point outbreak, but multi-party forcing debts.
The first to bear the brunt is that the Lanzhou Municipal Bureau of Natural Resources issued a reminder announcement, requiring 41 units that owe the land transfer fees to pay as soon as possible. Among them, almost all are Evergrande related companies. There are 19 project companies for “Lanzhou Evergrande Cultural Tourism City”, and 1 project company for “Lanzhou Xiguheng Metropolis Plaza”.
Although there is no specific amount involved, this paper reminder announcement of the Lanzhou Municipal Government has pushed Evergrande’s debt crisis to the forefront.
Followed by the Huaibei Mining Engineering Construction Co., Ltd., a subsidiary of the listed company Huaibei Mining Group, sued Lu’an Hengda, demanding that Lu’an Hengda pay the construction cost and liquidated damages of 401,262,800 yuan.
Lu’an Hengda is a 100% holding subsidiary of Evergrande Hefei Company, and a direct grandchild of Evergrande Real Estate Group. Therefore, Huaibei Mining requires Hengda Real Estate Group to bear joint and several liabilities for Lu’an Hengda’s project arrears.
However, Evergrande believes that the subject of the contract involved is not Evergrande Real Estate Group and has no legal and contractual basis, so it filed an objection to the court in accordance with the law.
The third is that on the evening of July 29, Evergrande received a judgment from the Intermediate People’s Court of Xiaogan City, Hubei Province: freezing the 76,320,050 shares of Langfang Development Co., Ltd. held by Evergrande Real Estate Group Co., Ltd., and the negative interest generated during the freezing period. freeze.
It is reported that the frozen shares this time account for all of the equity of Langfang Development Co., Ltd. held by Evergrande and 20% of the total share capital of Langfang Development Co., Ltd.
Fourth, Evergrande was reported by the masses on suspicion of unfair competition for selling a house in Heze, Shandong, for a sharp price cut.
From the above, we can see that Evergrande is in a very difficult situation at this time. As a leading real estate company in China, Evergrande will inevitably experience unforgettable pain in order to overcome the debt crisis.