Earlier this week, China Evergrande Group startled investors all over the world as news emerged that the property giant was at risk of defaulting.
The company built and sold apartments and other developments to the public, but generated excessive amounts of debt in the process. The company’s $300 billion in debt is equal to 2% of China’s GDP. Ouch. Evergrande is “the most indebted property developer“ in the world, at the moment. Its downfall could prompt massive turmoil in China, which could boil over into the broader market like it did earlier this week.Â
Beijing, which has a history of bailing out “too big to fail” corporations, might not be bailing out this goliath. Instead, Beijing could look to protect individual homebuyers and “smaller banks that could be destabilized by a default,” according to CNBC. Suppliers and investors might be left out in the cold.Â
It’s still not clear whether or not Evergrande paid its $83.5 million interest payment on a dollar-denominated bond due today. However, Reuters reported that “some [investors had] given up hope of getting a coupon payment by the deadline.“ The company will have up to 30 days to pay before going into default. There are even more obligations awaiting Evergrande next week.
The company has been quiet today, but Chinese officials are supposedly preparing for the fallout. $3333.HK is down 40.4% this month. ð