An “undisclosed lender” (a Chinese state owned bank?) has jumped the line on claims against Evergrande's remaining piles of cash, seizing some $2 billion in deposits, including deposits pledged as security to international investors.
Unsurprisingly, a number of international investors are not pleased and preparing to sue.
The surprise revelation is set to ignite a legal battle between major international investors and the Chinese developer, which has more than $300bn in liabilities. Evergrande’s collapse, which represents the biggest debt restructuring in China’s history, comes as a slowdown in the real estate sector poses increasing financial and political risks to President Xi Jinping’s government.
Playing political favorites in how Evergrande's financial carcass is carved up might play well in China, but it won't make Chinese investment attractive in the future.