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Evergrande stock has steadily declined over the course of 2021.

(Greg Baker/AFP via Getty Images)

Shares in

Evergrande Group,

the embattled and highly indebted Chinese property giant, fell 5.4% in Hong Kong Wednesday after a report that it won’t make interest payments on loans next week.

The latest in a steady set of declines brings the stock (ticker: 3333.Hong Kong) down to 2.81 Hong Kong dollars after trading above 17.20 HKD in January—a more than 80% slide year to date.

China’s Ministry of Housing and Urban-Rural Development told banks this week that Evergrande will not be able to pay debt obligations due Sept. 20, Bloomberg reported Wednesday, citing anonymous sources familiar with the matter.

The property group is discussing getting extensions to interest payment deadlines and rolling over some loans, the report said.

Failing to meet debt obligations in the form of bank interest would bring Evergrande—the world’s most indebted developer, with around $300 billion of liabilities—a step towards restructuring. 

The potentially looming bankruptcy of Evergrande would mark a turning point for one of history’s hottest property markets, with developers likely to struggle with long-term shifts in the sector, Barron’s reported Tuesday.

Evergrande’s declining fortunes, which also sparked investor protests in Hong Kong, have been a new source of volatility in China, and the latest update has added pressure to bank stocks. 

Shares in

Industrial and Commercial Bank of China

(IDCBY),

Agricultural Bank of China

(ACGBF), and

China Construction Bank

(CICHY) were all down between 0.2% and 0.6% Wednesday.

Write to Jack Denton at jack.denton@dowjones.com

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