Two local governments have taken control of presale revenues from Evergrande’s properties so that “homebuyers’ interest can be protected and project construction continued”, as per a circular seen by FT. The local governments in question are the Nansha District housing and urban-rural construction bureau in the southern city of Guangzhou and district housing bureau in Zhuhai, a neighboring city to Macau. Bo Zhuang, a Singapore-based economist at Loomis Sayles said, “It is common for Chinese developers to allocate sales proceeds earmarked for particular projects for other uses, ranging from debt payments to land purchases…That is no longer an option”. With project completion being a major focus by regulators, putting presale proceeds under their watch can ensure that project funding is kept tied and not misused.
Evergrande’s dollar bonds were trading weaker with its 8.25% 2022s down 0.7 to 27.875.
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