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Evergrande resumes work on projects in southern China

Evergrande, the Chinese property developer battling high debt, said it had resumed work on a handful of projects across the Pearl River Delta in southern China as it sought to reassure anxious investors.

The announcement came after Evergrande made an $83.5m interest payment on one of its offshore bonds that it had missed in September, state media reported on Friday.

In a post on the company’s WeChat social media account on Sunday, Evergrande published pictures of workers at projects in at least nine southern cities, emphasising that some had even finished construction. Some of the timestamped pictures of the projects in Guangdong province were of tradesmen painting the interiors of the apartments.

“On-site construction is proceeding smoothly, safely and in an orderly manner,” the company said in the statement. Evergrande is based in Shenzhen, which is across the border from Hong Kong in Guangdong.

In a filing on August 31, the company said it had suspended construction at a number of its hundreds of projects, many of which were fully sold, without providing details. The company cited delays in payments to suppliers and construction fees for the stoppages.

It added that if work was not resumed, “there may be risks of impairment on the projects and impact on the group’s liquidity”.

Chinese homebuyers have became more and more concerned about the situation, and at least two local governments have seized control of Evergrande’s sales revenue.

Friday’s report of the bond payment was just days before the end of a 30-day grace period would have resulted in a formal default. A bondholder subsequently confirmed to the Financial Times they had received the payment.

The initial missed payment on September 23 sparked volatility across international markets and global fears over the health of China’s real estate industry, which contracted in the third quarter, according to data released last week. Other smaller developers have over recent weeks defaulted on their debts.

During weeks of uncertainty, advisers to Evergrande bondholders had complained they had received no “meaningful engagement” from the company.

As of the end of June, the group’s total land reserves covered 778 projects across 223 cities in China. It had total liabilities of more than $300bn.

The government has given no indication it will support Evergrande, with the People’s Bank of China earlier in October blaming the company for its woes and saying any spillover to the financial system was “controllable”.

Additional reporting by Joe Rennison in New York


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