China Evergrande has been issued an early delisting warning from the HKEX, prompted by its failure to publish its audited accounts and address a $2bn enforcement action by creditors. According to a filing, the developer failed to comply with listing rules, with the last disclosure of its accounts being their June 2021 interim report. SCMP also notes that their stock has been suspended from trading since March 21, 2022, following the default on its dollar bonds in December which also triggered cross default on other obligations. While the HKEX rules state they may cancel any security listing that has been suspended for 18 consecutive months, they have the discretionary right to impose a “shorter specific remedial period”. Referring to the HKEX rules, Andy Lee, CEO of Centaline China said  “The stock exchange’s “resumption guidance” may serve as an explanation to protect shareholders. I don’t think in the short-term, chances for resumption are high…While the domestic environment has improved a little bit, its own problems remain to be [solved] in its restructuring plan.” This news comes a day after an update by Evergrande that it was on track for an end-July preliminary restructuring plan.

Evergrande dollar bonds were slightly higher by 0.31 points at distressed levels of ~9.5 cents on the dollar.

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