(Bloomberg) -- China’s central bank pledged to ensure a “healthy property market”, in the latest signal that Beijing seeks to prevent China Evergrande Group’s debt crisis from destabilizing its economy and financial system.
While the situation remains unresolved, some emerging market funds, including those at BlackRock Inc (NYSE:BLK). and BlueBay Asset Management LLP, started buying the developer’s dollar bonds at distressed levels, Morningstar Inc. said in a report.
Chinese Estates Holdings, a firm controlled by the billionaire family of Joseph Lau, a long-time ally of Evergrande’s founder, sold about HK$350 million ($45 million) of Evergrande’s shares, according to a Hong Kong filing on Monday. The sale cuts Chinese Estates’ stake to 4.7%, while Chief Executive Officer Chan Hoi Wan dumped all of her personal stake.
Key Developments:
- BlackRock, BlueBay See Value in Evergrande Bonds: China Today
- Billionaire Poker Pal of Evergrande Founder Heads for the Exit
- PBOC Vows ‘Healthy’ Property Market Amid Evergrande Crisis
- Shenzhen Govt Investigates Evergrande Wealth Mgmt Arm: Reuters
- Lagarde Says Direct Euro-Area Exposure to Evergrande Is Limited
Where International Bond-Fund Managers Stand (4:42 p.m. NY)
Analysts at Morningstar Inc. including Shannon Kirwin released a report outlining where a number of major international bond-fund managers stand with regard to Evergrande debt and the possible fallout from the company’s situation.
Emerging-markets teams at Pimco, Barings and T. Rowe Price Group Inc. have avoided or been significantly underweight Evergrande debt in their portfolios since at least mid-2020, when the Chinese government announced stricter debt limits for highly leveraged companies, Morningstar said in the report. Other managers were initially more optimistic, but have since tempered their optimism and exited positions, according to the study.
BlackRock’s emerging-markets team led by Sergio Trigo Paz, meanwhile, added Evergrande bonds after they reached distressed levels in mid-September. The logic, according to Morningstar: Because there are “considerable” chances for a debt restructuring or takeover by a state-owned company, the recovery value of the bonds is likely to exceed their current price of roughly 30 cents on the dollar.
Shenzhen Probes Wealth Arm, Reuters Reports (11:40 a.m. NY)
A unit of Evergrande is being investigated by the Shenzhen government, Reuters reported, citing a letter from the city’s financial regulator to investors.
The Shenzhen Financial Regulatory Bureau said “relevant departments of the Shenzhen government have gathered public opinions about Evergrande Wealth and are launching a thorough investigation into related issues of the company,” according to the letter, Reuters reported.
Evergrande and the Shenzhen government didn’t reply to requests from Reuters seeking comment.
Direct Euro-Area Exposure to Evergrande Is Limited (9:04 a.m. NY)
European Central Bank President Christine Lagarde reiterated that Europe’s direct exposure to Evergrande is limited.
“How this crisis of Evergrande will be handled by the Chinese authorities will obviously determine how it affects the Chinese economy and the real-estate sector in that economy, and whether it will have spillover effects in other parts of the world,” she added in European Parliament on Monday.
PBOC Vows ‘Healthy’ Property Market (7:14 a.m. NY)
The People’s Bank of China will work to safeguard the healthy development of the real-estate market and protect home buyers’ lawful rights, the bank’s monetary policy committee said at its quarterly meeting Friday, according to a statement released Monday.
The central bank will step up efforts to coordinate monetary, fiscal, industrial policies and regulations to support the economy with finance and prevent risks. It also pledged to drive real lending rates lower.
Here are Evergrande dollar bond interest deadlines for this month and next:
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