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China's debt-ridden Evergrande resumes work on more than 10 property projects

China's debt-ridden Evergrande resumes work on more than 10 property projects

An aerial view shows residential buildings at the construction site of Evergrande Cultural Tourism City, a China Evergrande Group project whose construction has halted, in Suzhou's Taicang, Jiangsu province, China, Oct 22, 2021. (Photo: Reuters/Xihao Jiang)

BEIJING: Shares of embattled Chinese developer Evergrande rose on Monday (Oct 25) after it said it had resumed work on more than 10 projects, as it sought to soothe fears about its debt struggles.

The liquidity crisis at one of the nation's biggest property developers has hammered investor sentiment, rattled China's crucial real estate market and fuelled talk of spillover into the wider economy.

But the firm - drowning in a sea of debt worth more than US$300 billion - last week paid interest on an offshore bond just before a Saturday deadline, averting a default and giving it a much-needed reprieve.

Evergrande was reported to have missed several offshore bond payments and while it had a 30-day grace period on some of them, there had been a general expectation it would not be able to meet its obligations.

And on Monday investors welcomed an announcement that its Shenzhen operations had "resumed work and production for more than 10 projects in six locations".

Shares in the firm rallied more than 4 per cent in early trade.

The group had 778 projects spanning 233 cities in China as at end-June, according to its latest interim report.

The company said on Aug 31 that some projects were suspended because of delays in payment to suppliers and contractors and it was negotiating to resume building.

On Sunday, it said in a post on its WeChat account that some of the projects it had resumed work on had entered the interior decoration stage while other buildings had recently finished construction.

Evergrande added that its efforts to guarantee construction would shore up market confidence and included several photos of construction workers on different projects, stamped with the time and date.

China's second-largest property developer last month also promised potential buyers it will complete building of their homes and said that work on one of the world's biggest football stadiums in the southern city of Guangzhou was proceeding as planned.

Highlighting the stresses on its core business, Evergrande also announced on Friday plans to give future priority to its electric vehicles business over real estate.

Evergrande's woes have reverberated across the US$5 trillion Chinese property sector, which accounts for a quarter of the economy by some metrics, with a string of default announcements, rating downgrades and slumping corporate bonds.

Its debt crisis is also being widely watched by global financial markets concerned about broader contagion.

Source: Reuters/dv

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