EverGrande: China’s realty giant Evergrande Group has not paid dues on some US dollar bonds despite the deadline passing last Monday. Another Chinese company Kaisa has also defaulted. After this, the Hong Kong Stock Exchange has banned the trading of shares of Kaisa Group Holdings.
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Rating agency Fitch has declared China’s Evergrande overseas bond as default. The company has failed to pay interest. It was supposed to pay $ 882 million on Monday, but the company could not do so.
Help sought from state government
Evergrande last week sought help from the government of its home province of Guangdong, in return for agreeing to send a working group to assist and assess the company’s issues. The Chinese government fears that many more companies may fall in the grip of this crisis. Evergrande said in an exchange filing on December 3 that it is going to actively engage with offshore credit providers as part of its restructuring plan.
cross default crisis
Evergrande’s default would increase the company’s cross-default on approximately $19 billion of bonds in international capital markets, and could lead Evergrande to become China’s biggest defaulter. This will further impact the confidence of the property sector and global investors. This loan was given by a unit named A Scenery Journey Limited.
Kaisa’s growing crisis
Another Chinese company Kaisa has also defaulted. After this, the Hong Kong Stock Exchange has banned the trading of shares of Kaisa Group Holdings. Non-payment of bonds rated at 6.5 percent means that Kaisa has technically gone into the category of default.
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