The property giant’s potential default is one of the biggest ever
Evergrande and the real estate sector in general are important quagmiers in China’s economy, and the hot housing market was already showing signs of a slowdown. At the same time, some analysts expect good news for foreign owners of the company’s dollar bonds.
Evergrande said last month that it hired financial advisors and said the default was a risk.
China’s housing bubble
Analysts have generally indicated that the Evergrande default will not cause a crisis of confidence, as was the case after the collapse of Lehman Brothers. But Evergrande is the largest property developer in the Chinese real estate bubble that has been expanding for years. Investment in China’s residential-property market over the past decade has dwarfed the US housing bubble of the 2000s, at least in terms of its share of domestic economic output.