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The Central Bank of China assured that the debt of more than 300,000 million dollars of the real estate giant Evergrande is an “individual” case and that the sector is in general “healthy”. Meanwhile, the company extended its default for three more months.
The debt is spreading. Evergrande, the world’s most indebted developer with liabilities exceeding $ 300 billion, will not have an impact on financial markets according to China’s monetary authorities.
Liu Zhongrui, an official with the China Banking and Insurance Regulatory Commission, said the case is “individual” and that it will not escalate to contagion from other markets as several analysts have warned.
For the third time, the company defaulted on its bond interest payments, causing fear among investors worldwide. According to the official, the risk of contagion to the financial industry is controllable.
“Evergrande’s problems are an individual case in the real estate sector. After years of macro-regulation in the real estate market, especially since the establishment of the long-term housing mechanism, China’s land and housing prices in the real estate market national are stable. Most of the companies are operating steadily with good financial indicators and the real estate sector is generally healthy, “said Zhongrui.
Following the remarks, Evergrande canceled talks to sell 50.1% of its shares in Evergrande Property Services Group Ltd to Hopson Development Holdings for about $ 2.6 billion.
Evergrande shares were listed on October 21 on the Hong Kong Stock Exchange after a two-week suspension and fell 10.5% at the opening after learning of the suspension of negotiations for the sale with Hopson.
The debt of the Asian giant is equivalent to the Gross Domestic Product of a country like Chile and represents 2% of China’s GDP.
With AP and Reuters
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