Beijing does not want Evergrande to fail. Except that, to read against the light yet another and, perhaps, definitive screwing up of the crisis of the brick giant crushed by 305 billion in debts and with shares now reduced to waste paper (-20% last Tuesday), there is ask yourself a few questions. For example, it has been months since the one that, for many, is Lehman Brothers of China, trying to reassure savers and investors, enraged and, shortly after, yet another flop on coupons for 82 million dollars.
Yet little or nothing happened and the music hasn’t changed. Indeed, as the Financial Times wrote, the same real estate group would have set aside capital to face the payments. A move that, at least for the moment, has not produced anything good. Moreover. Evergrande recently announced that it has set up a risk management committee, liaising with state officials to help “mitigate and eliminate future risks.” And this after he made it known over the weekend that he had received $ 260 million solicitations from creditors and that he could not guarantee adequate funds.
In short, there is great confusion. Also because someone begins to lose patience and seriously. Fitch this morning declared the company officially in default after the non-payment of the last dollar coupons. The company has decreed yet another downgrade to ‘RD’ (Restricted Default) level, from the previous (and disheartening) ‘C’.
Together with the main company, the rating of the subsidiaries Hengda Real Estate and Tianji Holding Limited was cut, involved in the issue of the non-repaid bonds, one of 645 million dollars, with a 13% coupon, and another of 590 million dollars, with a coupon at 13.75%. Fitch has set RR6 – and that is very close to zero – the level of possible recovery of accrued debts, writes Adnkronos.
While Standard & Poor’s speaks of an “inevitable” default, according to the Associated Press, a bondholder of the Chinese giant, Financial Market Partners Capital (Fmpc) Consulting AG based in Liechtenstein and with the technical advice of Msa Deutsche MarktScreening Agentur, is preparing an application for insolvency against Evergrande.
It could be the first act in an avalanche of other requests, which would corner the group, forcing them to take the books to court. A default of this magnitude would trigger cross-failures on all $ 19 billion of the group’s bonds in international financial markets (but the debt exceeds $ 300 billion, including exposure to banks) and put Evergrande at risk of becoming the largest. insolvent group of China, with a noticeable domino effect on other sectors.
But there is no air of surrender in Beijing, at least not yet. To begin with, the Chinese central bank, the PBOC, has cut the compulsory reserves of banks by 0.5% to free up liquidity and support the real estate and technology system. And then, closely, the president of Pboc,Yi Gang made it known that “the rights of shareholders and creditors of Evergrande, the Chinese giant that has real estate development as its largest business, will be fully respected in the order of their legal compensation”. Calm and cool, then.
Too bad that on December 3 Evergrande officially admitted for the first time in a statement on the Hong Kong Stock Exchange, where it is trading at $ 1.7 per share, that there is “no guarantee that the group will have sufficient funds to continue. to meet their financial obligations “. This one, which sounds like a surrender.
