Shares plunge, ratings cut at indebted China developer Evergrande

Beijing (AFP) –


Shares of embattled Chinese real estate giant Evergrande plunged on Tuesday, deepening an investor retreat with analysts cutting its credit and stock ratings again.

The Hong Kong-listed company is one of China's largest and most indebted private conglomerates, and fears have mounted that it is on the brink of bankruptcy after years of rapid growth and a buying spree.

On Tuesday, its Hong Kong traded shares plummeted as much as 8.8 percent to HK$3.53 -- sliding down towards the price it initially listed at in 2009 -- before closing 7.75 percent down.

The stock rout comes on the same day Moody's Investors Service downgraded Evergrande's credit rating, indicating it is "likely in, or very near, default".

"The downgrades reflect Evergrande's heightened liquidity and default risks given its sizable amount of maturing debt over the next six to 12 months," said Moody's senior analyst Cedric Lai.

The moves are also a sign of the "weak recovery prospects of Evergrande's creditors, if there is a default," Lai added.

Last week, Evergrande said its total liabilities had swelled to 1.97 trillion yuan ($305 billion) and that the group faced mounting legal challenges and "risks of defaults on borrowings".

Goldman Sachs has cut the stock from neutral to sell, Bloomberg News reported Tuesday, adding that the stock has dropped 76 percent this year.

Moody's said Evergrande would have to rely on asset sales or investments to generate funds for debt servicing.

Evergrande is one of the largest private companies in China, with a presence in more than 280 cities.

Any possible bankruptcy of the group -- which claims to employ 200,000 people and indirectly generate 3.8 million jobs in China -- would have major repercussions on the country's economy.