World The Chinese Giant Evergrande threatened with default, Beijing invites itself to the

01:20  08 december  2021
01:20  08 december  2021 Source:   france24.com

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Chinese property giant Evergrande has a big debt problem – here's why it matters. Analysts said China 's shift toward monetary policy easing would be noteworthy in turning things around for the troubled real estate market. "What is very noteworthy … in my view, is that Chinese policymakers' rhetoric has shifted significantly most recently, with an emphasis on easing, which includes the reserve requirement ratio cut, a wider easing of curbs on the real estate sector, a pledge for stabilization in 2022 and focus on economic support through various monetary policy tools," said Hennecke.

Chinese property giant Evergrande is on the brink of collapse, and analysts warn the potential fallout could have far-reaching implications that spill outside China 's borders. " Evergrande 's collapse would be the biggest test that China 's financial system has faced in years," says Mark Williams, chief Asia Investment bank Natixis said the Chinese government will avoid "systemic risks" in the lead-up to the 2022 National Congress of the Chinese Communist Party, given its historical importance. "However, this would also imply China Evergrande 's debt crisis may snowball down the road," the bank said in a

À l'entrée du siège de China Evergrande Group à Hong Kong, lundi 4 octobre 2021. commands © AP at the entrance of China Evergrand Group's headquarters in Hong Kong, Monday, October 4, 2021.

The Chinese group Evergrande Tutoy Once again Failure to pay. He had a month to honor an abyssal debt. So far the real estate promoter has always managed to repay his creditors at the last minute.

For the first time, the Chinese real estate promoter Evergrande failed to repay its creditors, said on Tuesday, December 7, the Bloomberg agency, at the moment when the Chinese state is invited to the head of the ultra- group. indebted to avoid bankruptcy.

private weight of the sector in China , Evergrande crumbles by about 260 billion euros of debt. The Group has been struggling for several months to honor its interest payments and deliveries of apartments. On November 6, he should have made a refund of $ 82.5 million (€ 73.1 million).

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Evergrande is once again warning that it could default on its huge debts as it struggles to cut costs or find anyone to buy some of its assets.

Property giant China Evergrande Group admitted Tuesday it is under "tremendous pressure" and may not be able to meet its crippling debt obligations. Over the past two days, angry protesters have gathered outside the real estate firm's headquarters, demanding to know about its future. What is the company doing to save itself ? On Tuesday, Evergrande issued another statement to the Hong Kong Stock Exchange, saying it had hired financial advisers to explore "all feasible solutions" to ease its cash crunch. The statement warned that there was no guarantee the property firm would meet its financial

Evergrand has a grace period of an additional month to set itself in good standing. The deadline ended on Tuesday at midday, at China's time. According to Bloomberg, several foreign creditors have still not been paid. This would make the first defect of payment of Evergrande, which at this stage did not comment.

In September already, the group could not honor several deadlines and suspended its rating on the Hong Kong Stock Exchange. But Evergrand had managed to repay his creditors before the expiry of the grace period.

Creating a "Risk Management Committee"

Sure of its financial force, Evergrand has invested in recent years in a multitude of sectors (tourism, digital, health insurance or electric car), which partly explains its abyssal debt .

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A default would trigger cross- defaults on all the company’s about bn of dollar bonds in international capital markets and put Evergrande at risk of becoming China ’s biggest-ever defaulter, which would ripple through the property sector and beyond, further rattling global investor confidence. Investors are also concerned about a potential default by Kaisa Group Holdings Ltd, which faces a 0m bond maturity on Tuesday. After Evergrande , it owes the most to foreign bondholders, with debts of bn. Another Chinese developer, Sunshine 100 China Holdings, said on Sunday that it had missed a

Now the Chinese property giant is in trouble — and there are fears it might take the global economy down with it. The uncertainty fueled a market sell-off this week and has raised concerns of a crisis similar to the one set off in 2008 by the collapse of the U.S. investment bank Lehman Brothers. The growing consensus is that while Beijing may not bail out Evergrande itself , it will move to protect homebuyers, as well as smaller banks that could be destabilized by a default . Foreign investors are more likely to be left out in the cold. “They're not going to step in and guarantee everything because

But the Chinese authorities, anxious about the debt swelling in the real estate sector, passed the prudential ratios to the promoters last year to reduce their use of the loan. This regulatory tightening has marked the beginning of financial worries for Evergrande.

In September, the firm had admitted for the first time that it could not perhaps honor all its commitments . And rarely in China, dozens of injured owners, not having received delivery of their apartment, had shown several days in front of the group's headquarters in Shenzhen.

Monday night, the proponent announced the creation of a "risk management committee" attending five leaders of public enterprises, and therefore indirectly the state. This group will have the mission to "reduce and eliminate future risks" for the promoter, a possible bankruptcy would be the biggest ever recorded for a Chinese company.

A "Controlling" by the public authorities

So far, the communist power has not indicated whether or not to steal the help of the private group. But it is ready to play a leading role in stepping the crisis, have a number of analysts contacted by AFP.

Friday, the authorities of Guangdong Province, where Evergrande has its headquarters, had announced sending a working group to its head "to supervise the risk management of the company". This is similar to "a potential takeover of Evergrande" by the public authorities, consider the analysts of the Firm Jefferies.

with AFP

Possible bankruptcy of the Chinese real estate giant Evergrande: Towards a disaster for the Chinese economy? .
© Valery Hache On 7 December, the Group should have carried out a refund on interests of € 73.1 million. Evergrande's setbacks lead to a crisis of trust with potential buyers: in recent months, sales and real estate prices are displayed by falling into many Chinese cities. AFP / Hector Retamal Regulatory hardening and sometimes risky investments have shown the heavyweight of Chinese real estate.

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