Monday, January 17

Fitch: Evergrande has defaulted on loans

The Chinese real estate giant, with NOK 2.6 trillion in debt, has for the first time defaulted on a loan with a foreign currency.

Published: Published:

The case is being updated.

Chinese housing developer Evergrande has defaulted on a loan for the first time, according to Bloomberg.

The credit analysis company Fitch Ratings cut the rating to “limited error”, and they pointed to non-payment on dollar bonds.

Financial Times writes that Fitch is the first company to declare a loan default.

The development marks the beginning of the end for the debt-laden giant, according to Bloomberg.

Evergrande had more than $ 300 billion in debt by the end of June, according to Bloomberg. This corresponds to almost NOK 2.7 trillion at today’s exchange rate.

One of the bond loans in dollars matured in November, and the deadline for default was Monday. Evergrande has previously reported that they have paid the loan bill at the last minute before default.

Declared default also for Kaisa Group

This week, China’s second largest real estate developer, Kaisa Group, also had a deadline for a loan payment.

The company’s shares were suspended on the Hong Kong Stock Exchange on Wednesday, pending a forthcoming announcement. On Thursday, it was still not in trade.

According to Financial Times Fitch has also declared Kaisa Group’s loan “limited failure”. According to the newspaper, the loan is worth 400 million dollars.

Created stock market turmoil

When it became known that Evergrande could end earlier this autumn, it created stock market turmoil all over the world. The market feared that the company’s problems could spread to the rest of the real estate sector. It is estimated to account for between 15 and 30 percent of the economy in the world’s second largest economy.

During the autumn, the company has sold both bank shares and electricity shares to raise money. On Friday, the company received claims from the creditors of 260 million dollars, and the company announced that they could not guarantee to have funds to meet the payment claims.

The Chinese authorities replied that they would help the company reduce risk and maintain stability in the real estate sector in the country.

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