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Evergrande has been demoted to restricted default status.

December 9, 2021 - Around 2 mins mins to read

China Evergrande Group’s rating was lowered by Fitch Ratings after it missed an interest payment on two batches of notes a few days ago.

Evergrande has been demoted to restricted default status.
Source: Nikkei Asia

Fitch Ratings stated today that it had lowered the ratings of China Evergrande Group and its affiliates Hengda Real Estate Group and Tianji Holding from C to RD (Restricted Default). According to Fitch, this action involves the company’s failure to pay interest on two batches of Tianji bonds due on November 6 and grace on December 6.

This is the company’s first default on a dollar-denominated bond. According to Bloomberg, this development marks the end of the real estate behemoth created 25 years ago by billionaire Hui Ka Yan. It is also the most challenging task facing the Chinese government in its efforts to prevent the real estate debt crisis from spreading to other areas.

The real estate giant was in debt to the tune of more than $300 billion as of June. They intend to “actively discuss” restructuring with international creditors. Bondholders who possess $ 19.2 billion of Evergrande’s US dollar-listed bonds may suffer significant losses due to the government’s reluctance to intervene.

Nonetheless, Chinese officials are getting involved. The Guangdong government, where Evergrande is located, summoned Hui Ka Yan after the business stated its intention to negotiate with creditors on a restructuring plan. Authorities will deploy an action team to Evergrande to encourage them to minimize risks, tighten internal controls, and maintain regular operations. Evergrande stated earlier this week that the administration now has the majority of seats on the new board of risk management.

Patrick

Coincu News

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