Fitch Ratings says Evergrande defaulted on its debt
On Thursday, the rating agency downgraded the company and its subsidiaries to “restricted default,” which means that the company has not met financial obligations.
According to Fitch, the rebate is due to the company’s inability to pay interest on two bonds due earlier this week. Grace periods ended on Monday and payments were due last month.
Evergrande didn’t make any announcements about payments and didn’t respond to rating agency inquiries. “So we assume they haven’t been paid,” Fitch said.
Evergrande did not immediately respond to a request for comment from CNN Business. However, the company had warned that this could happen. In a statement to the stock exchange last Friday, he said he may not have enough funds to meet his financial obligations. At the time, he said he planned to “actively complicate” with offshore creditors in a restructuring plan.
Fears of default led Evergrande shares to fall 20% on Monday. So far this year, shares have lost 87%.
The company had been struggling for months to raise cash to pay the lenders, and Xu has even been selling personal assets to support his finances. Previously he seemed to avoid defaulting on any of his offshore bonds by paying overdue interest before his grace periods expired. Now, however, this streak is over.
Another credit rating agency, S&P, said earlier this week that “default seems inevitable for Evergrande” with $ 3.5 billion in US dollar-denominated bonds maturing in the coming months.
“The sender [Evergrande] It doesn’t look like much progress has been made on the resumption of construction, given its difficulties in securing new funding, “S&P Global analysts wrote in a note released Monday.
Chinese authorities have tried to contain the rainfall. Last Friday, the local government in Guangdong Province, where Evergrande is headquartered, said it would send a working group to Evergrande to oversee risk management, tighten internal controls and maintain normal operations, at the request of the company.
“The rights of Evergrande’s shareholders and creditors will be fully respected in accordance with their legal seniority,” PBOC Governor Yi Gang said in a video address at a Hong Kong forum on Thursday, according to the central bank.