Reprieve for Evergrande

Regulators have signed off on a China Evergrande Group (3333) proposal to renegotiate payment deadlines with banks and other creditors, paving the way for a temporary reprieve as the cash-strapped developer struggles to come to grips with more than US$300 billion (HK$2.34 trillion) of liabilities.

The Financial Stability and Development Committee, the nation’s top financial regulator, gave its blessing last month after it missed interest and principal payments on loans, an insider said.

Evergrande, controlled by Xu Jiayin, has already contacted some banks and trusts to request deadline extensions, four people said. It’s unclear how many of those talks have led to agreements and whether it intends to delay payments to bondholders.

The development suggests Evergrande has regulatory backing to negotiate with creditors on a piecemeal basis, as it tries to ease a cash crunch that has unnerved investors in China’s US$12 trillion bond market. While the company’s main banks had discussed setting up a creditor committee as recently as last week to consolidate repayment decisions, lenders and regulators have decided to give it more time to solve its liquidity crisis before taking more drastic measures, the insiders said.


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