Investor confidence in China Evergrande Group is plunging amid mounting signs that the world’s most indebted developer faces a cash crunch.
The property giant’s stock tumbled to a four-year low on Tuesday, July 20, extending its two-day loss to 23% and wiping out a surge last week that was fuelled by hopes for a special dividend. Several of Evergrande’s local and offshore bonds sank to all-time lows, with its 2025 dollar note falling to 54 cents. Bonds of other junk-rated Chinese borrowers also dropped as worries about contagion increased.
Long-simmering doubts about Evergrande’s financial health intensified this week after the company had a US$20 million bank deposit frozen by a local court and was hit with a property sales ban by a city government alleging it had failed to set aside enough funds in escrow accounts.