Evergrande chairman reassures investors, shares surge

Just as Thursday deadline for a dollar-bond coupon loomed large for indebted Chinese property giant Evergrande, its chairman Hui Ka Yan sought to assure investors that the firm would make it a top priority for them to be able to redeem their products.

Hui Ka Yan, the chairman, said that the company was striving to ensure quality delivery of properties and stressed the importance to resume construction on developments where building had been halted

The assurance had a positive impact and Evergrande's shares jumped as much as 32 per cent. This year, when the threat of Evergrande defaulting on its interest payments loomed large, the company's shares have plunged around 85 per cent.

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The bounce in the shares was also a reaction to Wednesday's news that an Evergrande unit had resolved a coupon payment with creditors, although this was just one of the hurdles the company faces as it labours under a $305 billion mountain of debt.

Also Read | China's Evergrande crisis: A global financial crisis in the making

The group's electric vehicle and property services units climbed around 3% and 9%, respectively.

Reuters quoted a source who said that Evergrande chairman's latest comments were "clearly aimed at stabilising markets but there seems to be not much information for bond holders," said a source familiar with the situation. "There's no clear plan as yet but we expect the debt to be restructured at some point," said the source, who declined to be identified as he was not authorised to speak to the media.

Global investors have been on tenterhooks as the deadline looms, worried that the company's malaise could spread beyond the country’s property sector and pose systemic risks to China's financial system.

Also Read | China's crisis-hit Evergrande says deal has been reached to avoid default

Chinese Estates Holdings, the second-biggest shareholder of Evergrande, said on Thursday it had sold $32 million worth of its Evergrande stake and planned to exit the holding completely.

On Wednesday, global markets reacted with relief when the People's Bank of China's injected 90 billion yuan ($13.9 billion) into the banking system and an Evergrande unit said it had "resolved" a coupon payment on an onshore bond.

Also Read | US stocks slide over fears of China property giant Evergrande's collapse

But it faces $83.5 million in dollar-bond interest payments due on Thursday on a $2 billion offshore bond. And more payments are coming due next week, with a $47.5 million dollar-bond interest payment due.

($1 = 6.4583 Chinese yuan renminbi)

(With inputs from agencies)