BEIJING, Sept.26 (Reuters) – Several local governments in China have set up special custodian accounts for the real estate projects of its most indebted developer, Evergrande (3333.HK), to protect funds for housing projects against embezzlement, the Caixin media said.
With less than $ 305 billion in debt, Evergrande missed a deadline for paying a dollar bond last week, and its silence on the matter has left global investors wondering whether they will have to take significant losses at the end of a 30-day grace period. Read more
Special accounts have been in place since late August in at least eight provinces where Evergrande has the most unfinished projects, Chinese media reported on Sunday, citing a source close to the developer’s management team.
These include Anhui, Guizhou, Henan, Jiangsu and cities in the southern Pearl River Delta, he added.
Custodian accounts aim to ensure that payments from homebuyers are used to complete Evergrande’s housing projects, and not diverted elsewhere, such as to creditors, Caixin said.
In some southern cities, such as Zhuhai and Shenzhen, the offices of the housing regulator, the Ministry of Housing and Urban and Rural Development, also participated in the supervision and review of the use of funds by the projects. Evergrande, he said.
Evergrande and the Housing Ministry did not immediately respond to requests for comment.
In recent months, the cash-strapped developer, who embodies the loan-to-build business model, has stopped repaying some investors and suppliers and halted construction work on numerous projects across China.
The housing regulator also set a September 24 deadline for regional offices to report on the funding gaps facing unfinished Evergrande projects, Caixin said, but it was not immediately clear whether this had been respected.
At the end of June, Evergrande still had 1,236 projects for sale, he said in a biannual report, including those completed and under construction.
The Wall Street Journal last week said Chinese authorities had asked local governments to prepare for a possible collapse of Evergrande, urging them to prevent the unrest and mitigate the ripple effects on the rest of the world. ‘economy.
Reporting by Cheng Leng, Yilei Sun and Ryan Woo; Editing by Clarence Fernandez
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