Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Chicago Mercantile: Certain market data is the property of Chicago Mercantile Exchange Inc. US market indices are shown in real time, except for the S&P 500 which is refreshed every two minutes. Your CNN account Log in to your CNN account On Thursday, Fitch downgraded the Kaisa Group to “restricted default.” “The rights of shareholders and creditors of Evergrande will be fully respected in accordance to their legal seniority,” PBOC governor Yi Gang said Thursday in a video speech to a Hong Kong forum, according to the central bank.īut other Chinese developers are also in trouble. The central bank on Monday also announced that it would pump $188 billion into the economy, apparently to counter the real estate slump. The People’s Bank of China and other top financial regulators have tried to reassure the public that Evergrande’s problems can be contained. Last Friday, the local government in Guangdong province, where Evergrande is based, said it would send a working group to Evergrande to oversee risk management, strengthen internal controls and maintain normal operations, at the request of the company. “The issuer does not seem to be making much progress in resuming construction, given its difficulties in raising new financing,” S&P Global analysts wrote in a note published Monday.Ĭhinese authorities have been trying to contain the fallout. Now, though, that streak has ended.Īnother credit ratings agency, S&P, said earlier this week that “default looks inevitable for Evergrande” with repayments of $3.5 billion on US-dollar denominated bonds due in the coming months. It previously appeared to avoid default on any of its offshore bonds by paying overdue interest before their grace periods expired. The company had been scrambling for months to raise cash to repay lenders, and Xu has even been selling off personal assets to prop up its finances.

So far this year, the stock has lost 87%. In another filing Monday, the company said it would set up a risk management committee that would be headed by Evergrande’s chairman and founder Xu Jiayin to focus on “mitigating and eliminating” future risks.įears of default sent shares of Evergrande plummeting 20% on Monday.

Song fan/Imaginechina/APĮvergrande's billionaire founder has been bailing out the business. Xu Jiayin (Hui Ka Yan), Chairman of Evergrande Group, attends a press conference during the First Session of the 13th National Committee of the CPPCC (Chinese People's Political Consultative Conference) in Beijing, China, 10 March 2018.Ī press conference on improving capability to guarantee and enhance wellbeing of the people was held on the sidelines of the first session of the 13th National Committee of the Chinese People's Political Consultative Conference (CPPCC) in Beijing, capital of China, 10 March 2018. At that time, it said it was planning to “actively engage” with offshore creditors on a restructuring plan. In a stock exchange filing last Friday, it said it might not have enough funds to meet its financial obligations. However, the company had warned this may be coming. The US Federal Reserve warned last month that trouble in Chinese real estate could damage the global economy.Įvergrande did not immediately respond to a request from CNN Business for comment. “We are therefore assuming they were not paid,” Fitch said.Įvergrande has about $300 billion in total liabilities, and analysts have worried for months about whether a default could trigger a wider crisis in China’s property market, hurting homeowners and the broader financial system. The payments were due a month ago, and grace periods lapsed Monday.įitch noted that Evergrande made no announcement about the payments, nor did it respond to inquiries from the ratings agency. The credit ratings agency on Thursday downgraded the company and its subsidiaries to “restricted default,” meaning that the firm has failed to meet its financial obligations.įitch said the downgrade reflects the company’s inability to pay interest due earlier this week on two dollar-denominated bonds. Evergrande, the embattled Chinese property developer, has defaulted on its debt, according to Fitch Ratings.

China developer default