London Daily

Focus on the big picture.
Friday, Aug 22, 2025

Chinese real estate developer Evergrande defaults on debt

Highly leveraged property development company China Evergrande Group (EGRNY) has defaulted on its debt servicing, Fitch Ratings ruled. As of early afternoon on Dec. 10, 2021, S&P Global Ratings and Moody's had not issued rulings of their own on Evergrande.

The decision by Fitch Ratings to declare that Evergrande is in default stems from its assumption that two interest payments that were due on Dec. 6, 2021, when a grace period expired, were not made. More specifically, Fitch downgraded its rating of Evergrande to "restricted default," which means that the Hong Kong-based property development company has neither ceased operations nor commenced formal legal procedures such as filing for bankruptcy.

'A Technical Default for a Long Time Already'
Evergrande has total liabilities worth about $300 billion. Included in this figure are about $19 billion in bonds that are denominated in U.S. dollars and issued offshore, a larger amount than is outstanding from any other Chinese property development company.

"We should have been calling this a technical default for a long time already, but nobody dared," according to Alicia Garcia-Herrero, the chief economist for the Asia-Pacific region at France-based investment banking firm Natixis. She added: "China is not making it clear because there's no pressure to make it clear. Ratings [agencies] should be pushing. Some investors did push. Nobody wants to label this because they don't want to bear the consequences. Everybody's trying to increase what they can get out of it."

Garcia-Herrero also indicated that there is an advantage to Evergrande and its investors if the company can avoid being labeled officially as in default. Specifically, not being tagged in this fashion should reduce the cost at which Evergrande can restructure its debt.

'Default Looks Inevitable'
While S&P Global Ratings has not yet officially declared Evergrande to be in default, it has issued a warning. On Dec. 7, 2021, S&P issued a report asserting that "default looks inevitable for Evergrande."1

On Dec. 3, 2021, Evergrande had issued its own warning that it was struggling to meet its financial obligations and that it was planning to "actively engage with offshore creditors" about debt restructuring. Creditors had demanded payments of about $260 million.

Evergrande Chairman Sells Shares
Evergrande Group chairman Hui Ka Yan has sold 277.8 million shares in his company, reducing his ownership stake by slightly over 2% from 61.88% to 59.78%. He also sold 1.2 billion shares in November, his first sale since the company went public in 2009.

"Steps have been taken to enforce a security interest in the shares, or rights to such shares held as security against" Hui, according to the regulatory filing that disclosed the transaction.

'Drawn Out' Impact, Not a Shock
Garcia-Herrero of Natixis anticipates that, with help from the Chinese government, the problems encountered by Evergrande and other Chinese property developers will have have a negative impact on that country's economic growth that is drawn out over time, rather than a sharp and immediate shock. She also expects that the impact on the financial markets will be limited because the holders of Evergrande's debt are mainly "high net worth individuals, [who] are holding Evergrande to the maturity, to the restructuring point."

However, Japan-based global financial services firm Nomura Group warns in its 2022 global economic outlook report that measures being taken by the Chinese government to curb speculation in the property market, in tandem with its carbon neutrality drive, may "result in a vicious cycle of rising defaults and slower growth in North China."

Newsletter

Related Articles

0:00
0:00
Close
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
MSNBC Rebrands as MS NOW Amid Comcast’s Cable Spin-Off
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
Finnish MP Dies by Suicide in Parliament Building
Outrage in the Tennis World After Jannik Sinner’s Withdrawal Storm
William and Kate Are Moving House – and the New Neighbors Were Evicted
Class Action Lawsuit Against Volkswagen: Steering Wheel Switches Cause Accidents
Taylor Swift on the Way to the Super Bowl? All the Clues Stirring Up Fans
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Apple Expands Social Media Presence in China With RedNote Account Ahead of iPhone 17 Launch
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Cambridge Dictionary Adds 'Skibidi,' 'Delulu,' and 'Tradwife' Amid Surge of Online Slang
Bill Barr Testifies No Evidence Implicated Trump in Epstein Case; DOJ Set to Release Records
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
The CEO Who Replaced 80% of Employees for the AI Revolution: "I Would Do It Again"
Emails Worth Billions: How Airlines Generate Huge Profits
Character.ai Bets on Future of AI Companionship
China Ramps Up Tax Crackdown on Overseas Investments
Japanese Office Furniture Maker Expands into Bomb Shelter Market
Intel Shares Surge on Possible U.S. Government Investment
Hurricane Erin Threatens U.S. East Coast with Dangerous Surf
EU Blocks Trade Statement Over Digital Rule Dispute
EU Sends Record Aid as Spain Battles Wildfires
JPMorgan Plans New Canary Wharf Tower
Zelenskyy and his allies say they will press Trump on security guarantees
Beijing is moving into gold and other assets, diversifying away from the dollar
Escalating Clashes in Serbia as Anti-Government Protests Spread Nationwide
The Drought in Britain and the Strange Request from the Government to Delete Old Emails
Category 5 Hurricane in the Caribbean: 'Catastrophic Storm' with Winds of 255 km/h
"No, Thanks": The Mathematical Genius Who Turned Down 1.5 Billion Dollars from Zuckerberg
The surprising hero, the ugly incident, and the criticism despite victory: "Liverpool’s defense exposed in full"
Digital Humans Move Beyond Sci-Fi: From Virtual DJs to AI Customer Agents
YouTube will start using AI to guess your age. If it’s wrong, you’ll have to prove it
Jellyfish Swarm Triggers Shutdown at Gravelines Nuclear Power Station in Northern France
×