Thursday’s deadline for a $83 million bond payment for Evergrande, China’s second-largest property developer, has passed, and although the company has not made a public statement, there are reports that it missed at least some of the payments.
Despite Evergrande’s silence on the issue, both Reuters and wall street journall reported that offshore holders of Evergrande bonds had not received payments by the Thursday deadline. According to Reuters, those who reported the default in payments to Evergrande were not named because they were not authorized to speak to the media.
Evergrande owes about $83 billion in bond interest, part of a larger package of more than $300 billion in debt that was spent in years of heavy borrowing as the company looked to grow with China’s expanding economy. Was being
While $83 million may appear small in the full scope of the company’s debts, it has played an important role for investors and creditors wanting to make predictions on where the company’s long-term fortunes may be headed.
According to Guardianhandjob Part of Evergrande’s problem lies in the fact that it faces cash flow issues, as its funds are tied up in existing investment and property development projects. Now, with a payout unlikely, a bailout from Beijing stands out as one of the most obvious means through which investors bet on being able to keep Evergrande afloat.
Unfortunately for the former real estate powerhouse, Beijing does not intend to provide direct financial support to the company.
Earlier this week, the government asked the local administration to be prepared for a possible collapse of Evergrande. This came next to a separate message issued to Evergrande, where Beijing instructed it to do everything in its power to avoid a near-term default. In addition, to protect its financial institutions, China injected $18 billion into the country’s baking system.
Investors have divided opinions on what the collapse of Evergrande will mean for the global economy. In a previous interview, Scott Kennedy, an expert in Chinese economics at the Center for Strategic and International Studies, said he expects the institutions closest to Evergrande to be hurt first, easing the financial pain of the collapse depending on the degree of separation. . Strong.
Some of the foreign regions that could suffer the most would be those that provide the company with materials to aid in its construction efforts, such as vendors of steel, lumber and cement. Overall, Kennedy did not expect the collapse to inflict major damage on the American economy.
Although investment giant BlackRock has taken a major stake in the Chinese firm, the pain of Evergrande default will make its way to American soil. In a previous interview, Stephanie Segal, an expert in Asian economics with the Center for Strategic and International Studies, said that foreign investors like BlackRock “may receive less favorable terms than domestic investors.”