Sat, January 28, 2023

China Evergrande Group is on the Brink of Default

China Evergrande Group is on the Brink of Default

China Evergrande Group has to cope with numerous issues on a daily basis. The company is again on the brink of default. Unfortunately, some offshore bondholders of China Evergrande Group did not receive coupon payments by the end of a 30-day period.

Several days ago, the company made it clear that it was struggling to meet its obligations. Creditors demanded $260 million from the company. However, Evergrande made it clear that it could guarantee funds for coupon repayment.

One of the country’s major real estate developers is grappling with over $300 billion in liabilities. The government of Guangdong province is ready to help the company. Moreover, it will send a team at China Evergrande’s request to oversee risk management, strengthen internal control and maintain operations.

China Evergrande Group and Authorities

The country’s central bank and others are ready to cope with China Evergrande’s problems. Furthermore, analysts believe that authorities’ concealed effort signalled that Evergrande has likely already entered a managed debt-asset restructuring process.

According to Morgan Stanley, such a process would involve coordination between authorities to maintain the operations of property projects. Moreover, they would likely facilitate debt restructuring discussions with offshore creditors after operations stabilize, according to the bank.

China Evergrande Group is not the only real estate developer struggling to cope with issues. In fact, this week, smaller developer Sunshine 100 China Holdings Ltd said it defaulted on a $170 million dollar bond due Dec. 5.

China’s largest offshore debtor among developers after China Evergrande Group is also on the brink of default. Kaisa Group Holdings Ltd said bondholders rejected an offer to exchange its 6.5% offshore bonds due Dec. 7. Kaisa Group Holdings Ltd also wants to extend the deadline for the $400 million debt repayment.

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