Evergrande stated in a brief exchange presentation on December 3 that it plans to “actively engage” with offshore creditors in a restructuring plan. The company assured that it plans to include all its offshore public bonds and private debt obligations in this plan. For now The Chinese government has not given signs of a rescue, although since October it has actively intervened the market with millionaire injections to mitigate the possible fall of the giant and avoid the dreaded contagion.
Evergrande, with a huge debt of about 300,000 million dollars (about 260,000 million euros), has been struggling for several months to meet interest payments and apartment surrenders. On November 6, the group was due to pay $ 82.5 million (€ 73.1 million) in interest. But the one-month grace period ended on Tuesday.
“Neither Evergrande nor its creditors have made any announcements about a repayment,” the credit rating agency Fitch said Thursday, assuming the group “has not paid.” This is the first default for Evergrande, which, despite having missed several deadlines in September, had always managed to pay its creditors in extremis.
Evergrande’s default comes after an effort by the Xi Jingping government to reduce the enormous indebtedness of the Chinese real estate sector with new regulations, which has made the sector’s vulnerability visible. These measures, which took effect in early 2021, have also hit other large developers such as Kaisa and Phantasia, which are in similar situations to Evergrande due to lack of liquidity to honor their interest payments.