Written by Jane White, CNN
Luxury homebuilder Evergrande Group posted third-quarter revenue of 4.08 trillion yuan (US$662 billion) for the period from April to September. It missed one of its own public promises to its creditors.
What exactly does that mean?
Evergrande had promised to pay bondholders at the end of the third quarter. But it made a $83 million debt payment to the state-owned China Development Bank (CDB) at the end of last month.
The South China Morning Post first reported the news of the missed payment.
The developer attributed the shortfall to “rampant borrowing costs,” and added that “while the recent appreciation of the renminbi, changes in leverage and stock-market movement are some challenges” that it faces.
The company wouldn’t say how much its third-quarter revenue was. But according to the South China Morning Post, net profit fell nearly 60% from the same period last year, to 25.5 billion yuan ($3.8 billion).
Meanwhile, Evergrande’s stock is now down by more than 50% from a recent high of HK$149 last year.
Evergrande’s disclosure is further evidence of China’s financial woes. The country’s leaders are concerned about high borrowing costs squeezing the financial system and lending to ailing companies.
“Rampant borrowing costs” is the latest justification offered by China for the negative rate that investors expect for the renminbi to hold relative to the US dollar. Officials have also said that China’s economic data was distorted by a one-off economic stimulus during the spring, and suggested that the economy will experience slower growth in the final quarter of the year.