STORY: The world’s most indebted company is in deeper trouble.
Shares in Chinese property giant Evergrande plunged on Monday (September 25) morning.
They were down as much as 24% in early Hong Kong trade.
That after it warned it was unable to issue new debt due to an investigation into one of its subsidiaries.
Group firm Hengda Real Estate said last month that it was being probed by regulators over suspected violations regarding the disclosure of information.
On Monday, Evergrade said that meant it did not qualify to issue new bonds.
The news comes just a week after police detained some staff at the company’s wealth management unit.
There was no detail on how many were held, or what the charges were.
Now the turmoil piles pressure on Evergrande’s restructuring plans.
Earlier this month it delayed a decision on what to do about its offshore debts, saying creditors needed more time to think.
The firm needs approval from 75% of the holders of each debt class to proceed with restructuring.
But sentiment on the whole sector remains feverish, with major rivals like Country Garden also teetering close to default.
The crisis in the property sector - which accounts for about a quarter of China’s economy - has sent tremors through global markets.
Investors worry what would happen if major firms went under, and have so far been unimpressed by Beijing’s moves to prop up the sector.