Evergrande Shares Plunge To 11-year Low

Shares of Evergrande on Monday plunged as much as 19 percent to their lowest in over 11 years, extending losses as investors take a dim view of its business prospects with a fast approaching deadline for payment obligations this week.

By noon, the stock had touched HK$2.06, the weakest level since May 2010.

The company's property management unit dropped over 12 percent, while its electrics car unit declined 8 percent. Movie streaming company Hengten Net, majority-owned by Evergrande, plummeted 14 percent.

Evergrande has been scrambling to raise funds to pay its many lenders, suppliers and investors, with regulators warning that its US$305 billion of liabilities could spark broader risks to the country's financial system if not stabilised.

One of Evergrande's main lenders has made provisions for losses on a portion of its loans to the embattled developer, while some creditors are planning to give it more time to repay, four bank executives told Reuters.

The developer said on Sunday it has begun repaying investors in its wealth management products with real estate.

Policymakers are telling Evergrande's major lenders to extend interest payments or rollover loans, and market watchers are largely of the view that a direct bailout from the government is unlikely.

Evergrande is due to pay US$83.5 million interest on Sept 23 for its March 2022 bond. It has another US$47.5 million interest payment due on Sept 29 for the March 2024 notes . Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.

In any default scenario, Evergrande will need to restructure the bonds but analysts expect a low recovery ratio for investors. Trading of the company's bonds underscored just how dramatically investor expectations of its prospects have deteriorated this year. (Reuters)