By Xie Yu

HONG KONG (Reuters – China Evergrande Group canceled Friday its plans to repay its investors in its wealth managing products. It is a step that highlights the liquidity crunch at the property developer, which has not been able to pay its offshore debt obligations.

Evergrande has $19 billion of international bonds and is deemed in Cross-Default by Rating Agencies after it missed a payment deadline earlier this month. Evergrande didn’t pay the offshore coupon due this week.

To repay creditors and suppliers, the developer is selling his assets and shares.

Evergrande announced Friday that investors in its wealth management products could receive $8,000 ($1,257) each month as principal, no matter when their investment matures.

Evergrande, once China’s most popular developer, is now insolvent with more than $300 billion. Evergrande did not mention any amounts and agreed to repay 10% by the end the month the product matures.

The company had previously agreed to continue making follow up payments to wealth management investors for three months afterward, until Evergrande’s debt to an investor is paid off, state media reported earlier in the year.

Evergrande posted a statement on Friday on the wealth unit’s website, stating that they would “actively raise money” and revise the repayment plan late-March. The company declined to elaborate.

According to the statement, this situation isn’t ideal because the wealth unit of the development tries to recuperate capital from projects that it has invested previously. Therefore, the original repayment plan wasn’t easy to implement.

Evergrande had, like other conglomerates with high levels of debt, issued wealth management products that were high yielding to investors. It was a popular method for borrowing money from small-time investors, which is an alternative to government restrictions.

As the liquidity crisis deepened at Evergrande, the firm’s wealth unit https://www.reuters.com/business/finance/with-gucci-bags-dyson-appliances-evergrande-wooed-retail-investors-2021-09-21 in late September missed a payment on one of its products, leading to protests by investors who fear they will never get their money back.

Some wealthy investors refused to pay the company for its plan to offer discounted apartments, shops, and parking spaces.

($1 = 6.3606 renminbi)