China has pumped more than $ 14 billion into the banking system, in a sign that the Chinese authorities are seeking to avoid a liquidity crisis in the sector in light of the seasonal increase in demand for loans with the debt crisis of the giant real estate company Evergrande.
And Bloomberg News Agency reported today that the People’s Bank (central) of China pumped 90 billion yuan ($ 14 billion) into the banking system through 14-day reverse repurchase agreements, the largest amount of liquidity pumped by the central bank in this way since last February.
At the same time, today’s agreements are the first in which the central bank pumps more than 10 billion yuan in liquidity in one day since the beginning of this month.
This comes as informed sources said yesterday that the Chinese authorities informed the major creditor banks of the giant Chinese Evergrande Group, that the group may stop paying the interests of the debts owed on it next week, which brings the giant and financially troubled real estate developer a step closer to what will be one of the largest operations of the company. Debt restructuring in China.
The sources added that the Chinese Ministry of Housing and Rural and Urban Development informed banks during a meeting this week that Evergrande would not be able to pay its financial obligations to them due on September 20.
Evergrande is still discussing the possibility of extending the credit facilities and extending the tenure of some loans. The real estate company will also not be able to pay one of the basic installments of at least one loan during the next week, according to one of the sources.
Last month, China’s financial authorities held a meeting with top executives of the Evergrande Group to ask the company to address its debt risks and issue a harsh warning to the troubled group.
The meeting was attended by representatives of the People’s Bank of China and the Banking and Insurance Supervisory Authority, who demanded that Evergrande take measures to maintain the stability of its operations and ensure the health of real estate and financial markets.