Evergrande resumes construction of stalled projects as debt repayments loom

Heavily indebted Chinese developer aims to meet the goal of delivering 39,000 apartment units this month

Residential buildings under construction at Evergrande Cultural Tourism City, a project developed by China Evergrande Group, in Jiangsu province, China. Reuters

China Evergrande Group said it has resumed construction at most of its housing projects as authorities push the debt-laden developer to pay migrant workers and deliver apartments.

Nearly 92 per cent of Evergrande’s property projects have so far restarted, compared with just about 50 per cent at the beginning of September, the company said on Sunday. The number of workers involved in the projects that have resumed building has risen 31 per cent from September to 89,000.

“As long as we do a good job in restarting work, production and construction, we’ll be able to deliver houses to buyers, resume sales and operations and pay off debts at all costs,” chairman Hui Ka-yan was cited as saying at a company meeting.

Evergrande is struggling with more than $300 billion in liabilities as a government campaign to deleverage developers and curb years of housing speculation takes a toll. Already labelled a defaulter after missing coupon payments on two bonds, Evergrande is facing a maturity wall next year and has said it plans to “actively engage” with offshore creditors on a debt restructuring plan.

Concerned that a deepening industry crisis would hurt economic growth and undermine social stability, Beijing has started to ease financing for some developers as well as homebuyers. Evergrande’s overhaul is now being guided by a risk committee that includes officials from its home province of Guangdong.

In a quarterly monetary policy statement released on Saturday, China’s central bank pledged greater support for the economy while reiterating its aim to promote the property sector’s “healthy” growth, protect homebuyers’ rights and better meet housing demand.

Wang Menghui, Minister of Housing and Urban-rural Development, said in a weekend interview with state TV that the government will make efforts to stabilise land and housing prices and ensure reasonable demand. Still, he also emphasised that housing policy won’t be used as short-term economic stimulus.

Evergrande must “sprint at full speed” to meet the goal of delivering 39,000 apartment units this month, Mr Hui said. The target is almost four times the firm’s average monthly delivery of under 10,000 units since September.

Thus far, more than 80 per cent of Evergrande’s business partners such as renovation companies and long-term material suppliers have resumed co-operation with Evergrande, Mr Hui said.

Evergrande has $7.4bn of local and offshore bonds due in 2022. It faces about $255 million in coupon payments on two dollar notes on Tuesday. Most of its offshore dollar bonds are trading below 23 cents on the dollar.