China breaks silence on Evergrande, saying risks ‘controllable’
BNN Bloomberg
China’s central bank broke its silence on the crisis at China Evergrande Group, saying risks to the financial system stemming from the developer’s struggles are “controllable” and unlikely to spread.
China’s central bank broke its silence on the crisis at China Evergrande Group, saying risks to the financial system stemming from the developer’s struggles are “controllable” and unlikely to spread.
Authorities and local governments are resolving the situation based on “market-oriented and rule-of-law principles,” People’s Bank of China official Zou Lan said at a news briefing on Friday. The central bank has asked lenders to keep credit to the real estate sector “stable and orderly,” said Zou, who is head of the financial market department.
Concerns are growing that the cash crunch at Evergrande is spilling over to other developers as President Xi Jinping maintains strict measures to cool the property market. Contagion fears intensified over the past two weeks after a surprise default by Fantasia Holdings Group Co. and a warning from Sinic Holdings Group Co. that its default was imminent.
“In recent years, the company failed to manage its business well and to operate prudently amid changing market conditions,” Zou said of Evergrande, which has more than US$300 billion of liabilities. “Instead it blindly expanded and diversified.”
The central bank is urging property firms and their shareholders to fulfill their debt obligations, Zou said. A slump in developers’ offshore dollar bonds is a natural market response to defaults, he added.
Zou also said:
