Evergrande Worries Rise After Missing Payment Deadline

0 32,590

Chinese property developer Evergrande is one step closer to bankruptcy after it exceeds a payment deadline for an interest payment. Unfortunately, this also increases the concerns in the financial markets that the financially troubled group may no longer be salvageable.

 

A debt of 250 billion pounds burdens Evergrande. The group is short on cash, and investors fear that a company’s collapse will affect the Chinese financial system. This may extend beyond just China, as several foreign investors also have large sums of money outstanding with the group.

On Thursday, a deadline for interest payment of 66 million pounds expired. However, bondholders to whom the debt was outstanding have not received anything, nor have they received any explanation from Evergrande about missing the payment term. The company now has thirty days to transfer the money. When that term expires, the company will default.

The Chinese central bank again pumped money into the banking system on Friday. This move is seen as a signal to support the markets. But Beijing has not commented on Evergrande’s plight. Chinese state media has also not indicated an imminent rescue package.

The pressure on the government to intervene is increasing. Homebuyers and small investors are getting increasingly angry because they’ve poured their savings into the company’s real estate and opaque wealth management products. The social unrest could also spread to other project developers because there is a risk that they too will end up in heavy weather due to Evergrande’s problems.

Leave A Reply