Evergrande shares plummet on default fears

Shares in troubled property developer China Evergrande Group tumbled on Monday, as the hugely-indebted firm moved closer to a potential default.

In a brief statement on Friday, the Chinese company said that "in light of its current liquidity status", there was no guarantee it would have sufficient funds to meet all its financial obligations.

It also noted it had received a $260m guarantee obligation, and warned that it if it was unable to meet it, creditors could demand accelerated repayment.

Its shares fell sharply as trading got underway in Hong Kong on Monday. By 0845 GMT they were off 19%, at a record low of HK$1.81.

Craig Botham, chief China+ economist at Pantheon Macroeconomics, warned on Friday that "after many narrow escapes, Evergrande has run out of luck".

He added: "The grace period for interest payments on two such debts, around $82m, expires Monday. Reports suggest default would trigger cross-defaults on the company’s $19bn outstanding dollar debt, and the company itself warned that other creditors could demand accelerated repayment."

Evergrande has managed to make three coupon payments in the past two months but now faces interest payments totalling $82.5m after a 30-day grace period ended on Monday.

Concerns over Evergrande’s future have unsettled global markets throughout the autumn. The firm, which borrowed heavily to build its property portfolio and has debts of around $300bn, owns around 1,300 projects in more than 280 Chinese cities.

Last week the People’s Bank of China openly criticised the firm, accusing it of poor management and pursuing "blind expansion", while authorities at its home province of Guangdong said on Friday it would send a team in to oversee risk management and maintain operations.