Crisis-hit Chinese property giant Evergrande staved off disaster after securing a deal on its debt repayments, sending a wave of relief across global markets.
The most indebted property developer in the world, with debts of over £220billion, sparked panic this week amid fears it could default on its loans, unleashing chaos across the Chinese economy that could spread internationally.
Comparisons were made with US bank Lehman Brothers, which sent markets into meltdown when it collapsed in 2008.
Evergrande, which has debts of over £220bn, sparked panic this week amid fears it could default, unleashing chaos across the Chinese economy that could spread internationally
But Evergrande’s main unit, Hengda, said it has agreed to settle a £26million repayment on a bond due today.
The statement, filed with the Shenzhen Stock Exchange, did not say how much or when the money would be paid, and failed to mention a £61million interest payment on an overseas bond, also due today, or another £35million due next week.
If the payment is not made, it has 30 days before it is considered in default. Evergrande, which builds flats for China’s upper and middle classes, spooked investors in August when it warned of a possible default on its massive debt.
Since then, its shares have tumbled roughly 48 per cent.
Evergrande’s shares in Frankfurt soared by over 35 per cent while the Hong Kong Stock Exchange was closed for a public holiday.
Markets also took heart after China’s central bank injected £14billion into the financial system.
Asia-focused stocks in London rose, with HSBC up 4.4 per cent, or 15.65p, to 375.4p while Standard Chartered climbed 4.7 per cent, or 19.4p, to 429.4p.
Hopes that the Evergrande situation would not slam the brakes on the Chinese property sector, a key consumer of raw materials, also boosted mining firms.
Antofagasta added 6.9 per cent, or 91.5p, to 1420.5p while Glencore jumped 3.9 per cent, or 12.2p, to 324.2p, Anglo American rose 3.6 per cent, or 88p, to 2562p and Rio Tinto bounced 2.9 per cent, or 134p, to 4841p.
