China Steps Up Funding Oversight of Evergrande Property Projects

According to Caixin (Chinese media group), the local governments in China was seen setting up special custodian accounts for the property projects of its most beholden developer, Evergrande, to protect funds set aside for housing projects from being rerouted.

Swerving under almost $305 billion of debt, the Evergrande missed a payment deadline on a dollar bond last week, and its silence on the matter has set majority of the global investors to wonder if they will have to swallow large losses after the 30-day grace period ends.

Special accounts have been set up since late August in at least eight provinces where Evergrande has the most unfinished projects, Caixin said on Sunday, citing a source close to the developer's management team.

Among 8 provinces include the Anhui, Guizhou, Henan, Jiangsu and cities in the southern Pearl River Delta, Caixin added.
According to the reports, the custodian accounts aim to ensure homebuyers' payments are used to complete Evergrande's housing projects, and not diverted elsewhere, such as to creditors.

In addition, they also mentioned that in some southern cities, such as Zhuhai and Shenzhen, the offices of the housing regulator, the Ministry of Housing and Urban Rural Development, were also involved in overseeing and reviewing fund use by Evergrande's projects.

As of the moment, the Evergrande and the housing ministry did not immediately respond to requests for comment.

The news from Caixin also said that the housing regulator has also set a Sept. 24 deadline for regional offices to report on the funding gaps facing Evergrande's unfinished projects, and right now, it is still not clear if this had been met.

From the data available, it is shown that by the end of June, Evergrande still had 1,236 projects for sale, it said in a semi-annual report, including those completed and under construction.

©Photo: Reuters