What’s new: The stock of China Evergrande Group grew around 8% Thursday in Hong Kong after the debt-ridden developer announced it had reached an agreement with China Guangfa Bank Co. Ltd. over a loan dispute which had triggered a sell off of both the property giant’s shares and bonds.
Just days after Evergrande threatened to sue the bank, the two sides reached an agreement, according to twin statements (link in Chinese) from Evergrande and Guangfa on Thursday which did not give further details.
Shares of Evergrande’s electric vehicle unit had jumped over 26% in Hong Kong by 2 p.m.
The context: The property developer’s stocks tumbled this week and several of its local and offshore bonds sank to record lows on Tuesday, with its dollar note due 2025 falling as low as 54 cents in the dollar.
Long-simmering doubts about Evergrande’s financial health intensified after the developer had a $20 million bank deposit frozen by a local court in East China’s Jiangsu province at the request of Guangfa Bank.
Evergrande said Monday it will sue Guangfa Bank as the $20 million loan doesn’t come due until March next year.
Bloomberg contributed to this report.
Related: Evergrande Contagion Risk Rises as Stock, Bonds Sink to New Lows
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)
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