CHINA EVERGRANDE BOND DEFAULT FREE
The Chinese government, meanwhile, has intervened to dismantle Evergrande in an orderly fashion, to avoid a spectacular crash that, in a worst-case scenario, could leave Chinese people who bought homes from the company high and dry.Īs "60 Minutes" correspondent Lesley Stahl reported recently, the intervention, and the crackdown on heavily indebted companies, is part of a wider rollback of free market policies in China. and European investors have largely accepted that their investments in Evergrande may soon be worthless, and while the company's shares are likely to take a huge hit, stock markets in the West have been anticipating the news and are less likely to be rocked. in its latest financial stability report, saying: "Financial stresses in China could strain global financial markets through a deterioration of risk sentiment, pose risks to global economic growth, and affect the United States."īut CBS News Asia correspondent Elizabeth Palmer reports that U.S. The Federal Reserve warned of direct risks to the U.S. On Thursday, Fitch confirmed the company had defaulted for the first time on more than $1.2 billion worth of bond debt, as it downgraded the firm's status to a restricted default rating. The logo of Evergrande Group is seen on the company's headquarters in Shenzhen, Guangdong Province, China, February 9, 2021. Real estate behemoth Evergrande has been the highest profile firm embroiled in the crisis, struggling for months to raise capital to pay off $300 billion in debt. China's government sparked a crisis within the property industry when it launched a drive last year to curb excessive debt among real estate firms as well as rampant consumer speculation.Ĭompanies that had accrued huge debt to expand suddenly found the taps turned off and began struggling to complete projects, pay contractors and meet both domestic and foreign repayments. Regulators in Beijing are trying to reassure markets that the world’s second-largest economy can weather the crisis at Evergrande and its smaller rivals, with Vice Premier Liu He becoming the highest-ranking official to assure that risks in the property market are controllable.Beijing - Two major Chinese property firms have defaulted on $1.6 billion worth of bonds to overseas creditors, Fitch Ratings agency said Thursday, as contagion spreads within the country's debt-ridden real estate sector. At least three developers defaulted on their dollar debt this month as junk bond yields surged to a decade-high.Ī gauge of Chinese real estate companies rallied 2.1%.
A government clampdown on leverage at indebted developers and measures to cool home prices have spurred a slump in sales and weighed on economic growth. Payment of the coupon may ease concern over the health of China’s property sector. It needs to pay interest on another four dollar notes this year. Evergrande has a hefty wall of maturing debt next year with some $7.4 billion coming due in onshore and offshore bonds. The company has more than $300 billion in liabilities.
Evergrande said late Wednesday that its property sales plunged about 97% during peak home-buying season and that it may not be able to meet its financial obligations. The recent collapse of talks to sell a stake in a unit for $2.6 billion has highlighted the difficulty the company faces raising funds through asset sales.
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