Embattled Evergrande Warns of Growing Default Risks as Pressures Mount

Cash-strapped property group China Evergrande Group said on Tuesday that it has engaged advisers to examine its financial options and warned of default risks amid plunging property sales, sending its stock and bond prices sharply lower, Reuters reported. The real estate giant has been scrambling to raise funds it needs to pay lenders and suppliers, with regulators and financial markets worried that any crisis could ripple through China's banking system and potentially trigger wider social unrest. In the latest development, Evergrande said two of its subsidiaries had failed to uphold guarantee obligations for 934 million yuan ($145 million) worth of wealth management products issued by third parties. That could "lead to cross-default", which would "would have a material adverse effect on the group's business, prospects, financial condition and results of operations," it said in a statement to the Hong Kong stock exchange, without providing further details on the products. The company's shares slumped to a six-year low in Hong Kong on Tuesday and the Shanghai bourse halted trading of its listed bonds amid wild swings in its price. Evergrande said that it has appointed Houlihan Lokey and Admiralty Harbour Capital as joint financial advisers, the clearest indication yet that it is looking at restructuring options, analysts say. Read more.
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