China’s Evergrande Moves to Calm Nervous Investors

China Evergrande Group

EGRNF 7.14%

was forced to defend itself against online allegations and dwindling investor confidence for the second time in less than a year, saying its business was operating normally and threatening individuals who spread unfounded rumors with legal action.

Shares of Evergrande, one of China’s biggest and most indebted property developers, have fallen in recent months, nearing lows hit in March 2020. Its bonds also have dropped in price in recent weeks, sending yields soaring, with the yield on one bond due in January 2024 topping 20% on Monday, according to Tradeweb.

Last week, internet users shared posts describing deep discounts offered by Evergrande. A May 27 article by Caixin, a Chinese financial-media outlet, said regulators were likely to scrutinize Evergrande’s dealings with

Shengjing Bank Co.

, a bank in which it owns a major stake,

On Monday, Evergrande said it hadn’t adjusted prices, discounts or payment plans for its regular apartments, leaving aside a “periodic mega-promotion.” It said it would repay a small amount of overdue commercial paper it owed a few companies, and said all its dealings with Shengjing Bank were in accordance with the law.

“All of our operations are running normally,” Evergrande said on its website, adding that it hadn’t missed an interest or principal payment in the 25 years since its founding.

Evergrande’s Hong Kong-traded stock closed up 3.2% Monday, trimming its year-to-date losses to about 21%, according to FactSet.

The company also said Monday that it would seek to hold people who spread “malicious rumors” legally accountable.

Chinese regulators have tried to calm the country’s property markets after years of rapid price rises, placing a ceiling on banks’ lending to the sector, and requiring weaker real-estate companies to deleverage.

Evergrande suffered from an earlier bout of market jitters in September last year, focused on a potential cash crunch, but it was able to secure the support of major investors to quell those concerns.

In its first-quarter results, Evergrande touted 18% year-over-year growth in cash collection, to 134.3 billion yuan, equivalent to about $21 billion. The company’s contracted sales grew 4% to 153.2 billion yuan.

As well as pursuing rapid growth in its core business, Evergrande has also expanded into other areas, such as making electric cars.

Write to Xie Yu at Yu.Xie@wsj.com

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