Rating agency Fitch has downgraded Chinese real estate giant Evergrande, which suffers from cash flow, from CC or very high levels of credit risk to C or near default.
Fitch said on September 28th Rating action announcement We have downgraded both Evergrande and its subsidiaries Hengda and Tianji because they may have missed the payment of bond coupons.
“The downgrade could make non-payment the default event after Evergrande misses interest payments on unsecured senior bonds, resulting in a 30-day grace period,” Fitch analysts said in a statement. It reflects that. “
The day after Evergrande said last week that China’s major real estate business had personally negotiated with land bondholders to settle yuan-denominated individual coupon payments, it paid $ 83.5 million in dollar bonds. I missed the deadline of September 23rd.
Bloomberg said some bondholders hadn’t received payments, but the company hasn’t issued an official statement about the omissions.
Fitch analysts said they couldn’t get confirmation that Evergrande made the September 23 coupon payment.
“Therefore, it is assumed that the company entered a 30-day grace period due to non-payment of interest before the default event was triggered,” Fitch said.
The embarrassed real estate giant also has to pay a $ 47.5 million bond coupon with another dollar bond on September 29th. Evergrande has forced offshore bondholders to speculate whether to pay interest on the bond, even though they have agreed to settle their debt with a Chinese bank in a $ 1.5 billion share sale agreement.
Evergrande’s silence on offshore payment obligations has cast doubt on investors around the world that at the end of the 30-day grace period, they may have to swallow big losses due to missed coupon payments.
With huge debt of over $ 300 billion, Evergrande has been on the verge of bankruptcy for years.
“A lot of ink has spilled as to whether the collapse of Evergrande will cause a” Lehman shock “in China. And it could be very successful in the sense that recent developments could destabilize the already fragile Chinese real estate market, “said a financial expert and contributor to The Epoch Times. Hwang Yu wrote in a recent editorial.
Beijing hopes that the supply of housing units will be in excess of about 80 million, with urban apartments 20 to 40 times the average annual salary of workers.
Chinese authorities are aiming to “keep the real estate market away from past’build-build-build’models” that have helped the country’s economic outcomes by forcing the country’s huge debt-bearing real estate developers to unleverage. , “Something has to give,” Yu insisted. Numbers.
Reuters contributed to this report.
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Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communication, and adult education. The best writing advice he has ever heard is from Roy Peter Clarke.