Evergrande alone has accumulated more than $ 300 billion in debt.
(Photo: AP)
Hong Kong, Shanghai The crisis of the shaky Chinese real estate company Evergrande is drawing ever wider circles. The also tight Chinese real estate developer Fantasia restricted trading in Shanghai with its bonds on Monday after a credit rating downgrade. In addition, the smaller real estate developer Modern Land announced that he wanted to ask investors to postpone a repayment date for outstanding bond debts.
The steps taken by the two companies make it clear what wave the Evergrande crisis is now making in the Chinese real estate industry. Evergrande has more than $ 300 billion in debt, of which nearly $ 150 million will soon be due in foreign debt.
Funders are already preparing for imminent payment defaults. For many non-governmental Chinese real estate developers, it is now a matter of surviving the next three months, says real estate analyst Cai Hongfei of brokerage firm Central Wealth Securities. “Asking you about your repayment plan in six to twelve months is a question you simply cannot answer.”
The Fantasia bonds are now only supposed to change hands after negotiations. The rating agency China Chengxin International Credit Rating (CCXI) had previously downgraded the stocks. So far these have been traded on the Shanghai Stock Exchange.
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Two Fantasia bonds were suspended from trading on Friday after parent company Fantasia Holdings missed the October 4 bond repayment deadline of $ 206 million. Most of Fantasia’s bond titles have already lost around 80 percent of their value.
The smaller real estate company Modern Land said it would ask its investors to postpone the due date for a dollar bond that expires on October 25 by three months. In this way, insolvency should be avoided.
More: “Financial debauchery will be punished” – The consequences of China’s new debt policy