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InvestmentsChina steps up funding oversight of Evergrande property projects

China steps up funding oversight of Evergrande property projects

© Reuters. An Evergrande signal is seen on the Evergrande Automotive R&D Institute Headquarters of China Evergrande Group in Shanghai, China September 24, 2021. REUTERS/Aly Song/Files

BEIJING (Reuters) – Several native governments in China have set up particular custodian accounts for property projects of its most indebted developer, Evergrande, to guard funds earmarked for housing projects from being diverted, media outlet Caixin mentioned.

Reeling underneath $305 billion of debt, Evergrande missed a fee deadline on a greenback bond final week, and its silence on the matter has set world buyers questioning in the event that they should swallow massive losses when a 30-day grace interval ends.

The particular accounts have been set up since late August in at the least eight provinces the place Evergrande has probably the most unfinished projects, the Chinese outlet mentioned on Sunday, citing a supply near the developer’s administration group.

These embody Anhui, Guizhou, Henan, Jiangsu and cities within the southern Pearl River Delta, it added.

The custodian accounts purpose to make sure homebuyers’ funds are used to finish Evergrande’s housing projects, and never diverted elsewhere, resembling to collectors, Caixin mentioned.

In some southern cities, resembling Zhuhai and Shenzhen, the places of work of the housing regulator, the Ministry of Housing and Urban‑Rural Development, had been additionally concerned in overseeing and reviewing fund use by Evergrande’s projects, it mentioned.

Evergrande and the housing ministry didn’t instantly reply to requests for remark.

In current months, the cash-strapped developer, which epitomises the borrow-to-build enterprise mannequin, has stopped repaying some buyers and suppliers and halted constructing work at many projects throughout China.

The housing regulator has additionally set a Sept. 24 deadline for regional places of work to report on the funding gaps dealing with Evergrande’s unfinished projects, Caixin mentioned, nevertheless it was not instantly clear if this had been met.

By the top of June, Evergrande nonetheless had 1,236 projects on the market, it mentioned in a semi-annual report, together with these accomplished and underneath development.

Last week, the Wall Street Journal newspaper mentioned Chinese authorities had requested native governments to arrange for a potential collapse of Evergrande, urging them to forestall unrest and mitigate ripple results on the remainder of the financial system.

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