China Minsheng Banking Group, a major creditor to Evergrande said yesterday that they have reduced loan exposure to the property developer. Minsheng Bank said that loan exposure to Evergrande had been lowered since September 2020 after scrutiny over its lending to the company noting that “The risk is maintained within a controllable range”. The announcement comes after Fitch downgraded Evergrande to B earlier this week. Bloomberg also stated that Evergrande may struggle to shake-off negative headlines after news that banks were rejecting commercial acceptance bills, or short-term IOUs issued by Evergrande to its suppliers went viral on social media. Chinese banks including ICBC and Minsheng Bank have been asked by the Chinese regulators to stress-test their exposure to Evergrande so that a capital or liquidity problem is averted. Evergrande in a separate statement to Bloomberg News said “Evergrande has stepped up efforts to recoup cash from sales, resulting in more liquidity and that has led to lower drawdown of credit from Minsheng Bank”. They added that its credit line from Minsheng was intact, and that the bank didn’t proactively take steps to reduce its credit exposure.
Evergrande meanwhile has arranged $1.75bn for its offshore payments that include its $1.47bn 6.25% bonds due June 28 and $299mn in interest payments for offshore debt. Evergrande says it has no domestic or foreign public bonds maturing before March 2022, and has already honored 7 offshore bonds worth $10.6bn in the past 15 months.
Evergrande’s dollar bonds were stable – its 9.5% 2024s were at 73.44 and its 8.75% 2025s at 69.35.
