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A liquidation order for China's most debt-laden developer begins a drawn-out process for creditors that is likely to lay bare the depths of China's real-estate downturn and leave builders locked out of global debt markets as investors shun exposure.
A Hong Kong court-appointed liquidator for China Evergrande, opens a new tab on Monday, more than two years after its default brought a years-long property boom to a shuddering halt.
It has assets of $240 billion and is the world's most indebted developer with nearly $300 billion in liabilities.
Markets expect foreign bondholders to be the biggest losers and owners of unfinished apartments to be prioritised.
The restructure or sale also holds broader significance for debt and real estate and for investor confidence as it unfolds against a backdrop of sliding home prices and economic malaise that's sent equity markets spiralling down to multi-year lows.
Evergrande debts trade below two cents on the dollar and its shares hit a record low on Monday before being suspended.
By Tuesday a recent bounce in developer stocks was in reverse and yuan notes in China Vanke, the country's No. 2 developer by sales, slipped a little to 79 yuan.
A positive surprise, he said, would be authorities in China acknowledging and assisting in executing the Hong Kong court order, though that is unclear.
Rock-bottom confidence is meanwhile on display in primary markets too, which were once dominated by developers.
Total U.S. dollar issuance for China collapsed to $42.5 billion last year from pre-pandemic levels above $200 billion, data from Dealogic showed and while resolving Evergrande's debts could help, investors expect that to be a slow process.