China's cash-strapped property giant Evergrande was on the verge of defaulting on a second bond on Wednesday despite agreeing to settle debt with a Chinese bank in a $1.5 billion stake divestment deal, a move which sent Evergrande's worthless stock squeezing higher, now up 50% from a week ago.
Early on Wednesday, Evergrande said in an exchange filing that it would sell a 9.99 billion yuan stake it owns in Shengjing Bank - its most valuable financial unit - to a state-owned asset management company.
"The company's liquidity issue has adversely affected Shengjing Bank in a material way," Evergrande said in the statement, adding that the introduction of the purchaser - state-owned Shenyang Shengjing Finance Investment Group Co. - will help to stabilize the bank's operations.
As of the first half last year, the bank had 7 billion yuan in loans to Evergrande, according to a report by brokerage CCB International, citing news reports.
Evergrande's original 36% stake in Shengjing Bank was among its most valuable financial assets, worth about $2.8 billion.
As of 5pm on Hong Kong, Evergrande had failed to make a $45.2 million in interest on a second offshore note, this one due 2024, according to Bloomberg.
Finally, on Monday China's central bank vowed to protect consumers exposed to the housing market, without mentioning Evergrande in a statement posted to its website, and injected more cash into the banking system.
Wednesday, September 29, 2021
Evergrande To Default On Second Offshore Bond After $1.5 Billion Bank Stake Sale
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