MNI BRIEF: China Evergrande Shares Slip As Restructuring Eyed

Chinese financial regulators emphasized risk to the broader property sector could be contained with the Evergrande crisis being an individual, short-term case, after the country’s most-indebted developer warned of possible cross-defaults on dollar bonds.

The People’s Bank of China said in a Friday statement that the Evergrande issue will pose little impact on the market, and the dollar bond market is quite mature to deal with relevant issues, and related departments will facilitate overseas bond repurchases and repayments for Chinese companies. Evergrande's shares in Hong Kong fell over 12% on Monday after an exchange filing on Friday that said the company plans to “actively engage” with offshore creditors on a restructuring plan.

Some Chinese developers have begun to buy back overseas bonds, and some investors have also begun to buy dollar bonds issued by Chinese developers as domestic home sales, land purchases, and financing of developers normalise, the PBOC said. The Guangdong provincial government is sending a working team to the company, raising expectations of government involvement and a managed debt restructuring.