Evergrande settles – to end jitters on market

CRISIS-HIT Chinese property giant Evergrande staved off disaster after securing a deal on its debt repayments, sending a wave of relief across global markets.

The most indebted property developer in the world, with debts of over £220bn, sparked panic this week amid fears it could default on its loans, unleashing chaos across the Chinese economy that could spread internationally.

Comparisons were made with US bank Lehman Brothers, which sent markets into meltdown when it collapsed in 2008. But Evergrande’s main unit, Hengda, said it has agreed to settle a £26m repayment on a bond due today. The statement, filed with the Shenzhen Stock Exchange, did not say how much or when the money would be paid, and failed to mention a £61m interest payment on an overseas bond, also due today, or another £35m due next week.

If the payment is not made, it has 30 days before it is considered in default. Evergrande, which builds flats for China’s upper and middle classes, spooked investors in August when it warned of a possible default on its massive debt. Since then, its shares have tumbled roughly 48pc.

Evergrande’s shares in Frankfurt soared by over 35pc while the Hong Kong Stock Exchange was closed for a public holiday. Markets also took heart after China’s central bank injected £14bn into the financial system. Asia-focused stocks in London rose, with HSBC up 4.4pc, or 15.65p, to 375.4p while Standard Chartered climbed 4.7pc, or 19.4p, to 429.4p.

Hopes that the Evergrande situation would not slam the brakes on the Chinese property sector, a key consumer of raw materials, also boosted mining firms.

Antofagasta added 6.9pc, or 91.5p, to 1420.5p while Glencore jumped 3.9pc, or 12.2p, to 324.2p, Anglo American rose 3.6pc, or 88p, to 2562p and Rio Tinto bounced 2.9pc, or 134p, to 4841p.