Banking

Evergrande restricted in default following missed bond repayment – reports

On Thursday (9 December), Fitch became the first rating agency to declare that the firm’s overseas bonds are in default, the Financial Times reported.

Evergrande missed a Monday deadline to pay back bond coupons, and still had not transferred funds by Wednesday, according to people close to the matter.

Earlier in the week, S&P Global had said that Evergrande’s default was “inevitable”. The real estate developer has over $300bn in liabilities.

The group’s chair Hui Ka Yan has reportedly resisted calls to raise cash through the sale of Evergrande’s best assets, including land and urban redevelopment projects in the prosperous Pearl River Delta region.

Hui had been freeing up funds from luxury assets such as art, calligraphy and three properties to help pay the company’s dues, however, according to Reuters.

Evergrande: Opportunity catalyst or the next ‘Lehmans-like scenario’?

Evergrande has also been pushing for more bank support in recent weeks in order to avoid collapse.

A state-led restructuring of Evergrande is now underway.

Chinese policymakers have previously been said to be facing a “moral dilemma” regarding the country’s real estate debt crisis, as they struggled to contain any potential contagion from the industry.

Fitch said that Kasia, another heavily indebted Chinese property firm, was also restricted in default following the failure to repay a $400m bond on Tuesday.

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