China's Central Bank Claims Evergrande Risks 'Controllable'

China’s central bank said on Friday that financial risks from China Evergrande Group’s debt problems are “controllable” and unlikely to spill over, amid growing investor concerns that the crisis could ripple through other developers, the Associated Press (AP) reported.

Photo Insert: Despite Evergrande being the world’s most indebted developer, with over $300 billion in liabilities, China’s central bank believes these debt problems are controllable.

Evergrande is the world’s most indebted developer, with over $300 billion in liabilities. The company missed a third round of interest payments on its offshore bonds this week, spooking investors globally and sparking concern that other companies in the sector may also default on payments.

“Of the total liabilities of Evergrande Group, financial liabilities are less than one-third. Creditors are also relatively dispersed, and individual financial institutions have little risk exposure,” People’s Bank of China official Zou Lan said at a news briefing Friday.

“Overall, the risk of the spillover to the financial industry is controllable,” he added.

Evergrande came under pressure after China’s ruling Communist Party ordered property developers to reduce their debt levels.

The authorities are trying to direct the industry toward a more sustainable pace of development after many years of stimulus-fueled growth. Zou said Evergrande was “poorly managed” in recent years and “failed to operate cautiously” according to changing market conditions.

Instead, the company had blindly diversified and expanded, which affected its operations and finances.

“The real estate industry is generally healthy,” Zou said, pointing out that most real estate companies are operating in a stable manner with health financial indicators.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic