China’s central bank said it summoned executives of the country’s most indebted property developer, China Evergrande Group, on Thursday and issued a rare warning that the company ought to reduce its debt risks and prioritize stability.
Evergrande has been scrambling for cash as it seeks to meet new debt-ratio caps. The scale of its debts has authorities and investors concerned that a collapse or default could trigger a far broader financial crisis.
Evergrande must “actively diffuse debt risk and maintain real estate and financial markets stability,” said the People’s Bank of China and China’s banking regulator, the China Banking and Insurance Regulatory Commission, in a joint statement.
“Evergrande, as a top real estate company, must earnestly implement strategic arrangements made by the central government to ensure the stable and healthy development of the real estate market, and strive to keep operations stable,” they said.
The high-profile warning comes just days after a leaders’ meeting chaired by President Xi Jinping called for efforts to defuse systemic financial risks. It also comes as a flurry of regulatory crackdowns in China dent foreign investors’ confidence.
The statement said senior Evergrande executives were summoned for “talks” on Thursday. Such public summons’ are unusual, though have been issued to Ant Financial in recent months, both before and after its ultimately scuppered stock market listing.
The regulators urged Evergrande to disclose information on major events by the rules and clarify market rumors on time.
Evergrande did not immediately respond to a request for comment.
The statement was issued after market hours. Evergrande stocks and bonds have been heavily sold for months amid fears it may not be able to meet repayments, with its share price hitting an almost five-year low in Hong Kong on Thursday. – Reuters