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| An Evergrande sign is seen at the Evergrande Automotive R&D Institute Headquarters of China Evergrande Group in Shanghai, China, Sep 24, 2021. (File photo by=Reuters/Aly Song) |
[Asia News = Reporter Reakkana] BEIJING: Media outlet Caixin reported that several local governments in China have set up special custodian accounts for property projects of its most indebted developer, Evergrande, to protect funds earmarked for housing projects from being diverted, Reuters reported.
Reeling under US$305 billion of debt, Evergrande missed a payment deadline on a dollar bond last week, and its silence on the matter has set global investors wondering if they will have to swallow large losses when a 30-day grace period ends. The special accounts have been set up since late August in at least eight provinces where Evergrande has the most unfinished projects, the Chinese outlet said on Sunday (Sept 26), citing a source close to the developer's management team. These include Anhui, Guizhou, Henan, Jiangsu, and cities in the southern Pearl River Delta, it added.
The custodian accounts aim to ensure homebuyers' payments are used to complete Evergrande's housing projects, and not diverted elsewhere, such as to creditors, Caixin said.
Evergrande and the housing ministry didn’t immediately respond to requests for comment. In recent months, the cash-strapped developer, which epitomizes the borrow-to-build business model, has stopped repaying some investors and suppliers and halted building work at many projects across China.
