China Evergrande Group was listed as a defaulter by Standard & Poor’s Global Ratings, which is the second credit risk assessment agency to do so.
Since Evergrande failed to pay the coupon before the end of the grace period earlier this month, Standard & Poor’s Global downgraded it to “selective default,” a move that may trigger a cross default of developers’ $19.2 billion debt. S&P Global also revoked the rating of the group at the request of Evergrande.
Fitch Ratings took the lead in announcing the default of the real estate developer on December 9. For a long time, Evergrande has been considered by many investors to be too large to fail, becoming the biggest victim of Chinese President Xi Jinping’s control of the country’s debt-laden conglomerate and the overheated real estate market. As liquidity pressures intensify, concerns have spread to Shimao Group holdings and other companies with higher ratings.
Earlier this month, the governor of the People’s Bank of China stated that Evergrande’s situation must be dealt with by the market, indicating that Beijing will not bail out the world’s most indebted developer because it is struggling with more than $300 billion in debt. Evergrande has stated that it plans to “actively engage” with overseas creditors regarding the restructuring plan. People familiar with the matter said separately that the company intends to include all of its offshore public bonds and private debt. Holders of Evergrande bonds, including Marathon Asset Management, said they expect offshore creditors to be close to the bottom of the repayment queue. According to people familiar with the matter, Evergrande is giving priority to payments to migrant workers and suppliers because the regulator urges the funding-strapped developer to avoid any risk of social unrest.
As the group’s stocks and bonds plummeted, founder Xu Jiayan’s wealth has shrunk by $17.2 billion this year. The second richest man in Asia, who once had a fortune of 42 billion US dollars, is now worth 6.1 billion US dollars.
Complete News Source : Hindustan Times
