Saudi Press

Saudi Arabia and the world
Wednesday, Sep 03, 2025

Chinese real estate developer Evergrande defaults on debt

Highly leveraged property development company China Evergrande Group (EGRNY) has defaulted on its debt servicing, Fitch Ratings ruled. As of early afternoon on Dec. 10, 2021, S&P Global Ratings and Moody's had not issued rulings of their own on Evergrande.

The decision by Fitch Ratings to declare that Evergrande is in default stems from its assumption that two interest payments that were due on Dec. 6, 2021, when a grace period expired, were not made. More specifically, Fitch downgraded its rating of Evergrande to "restricted default," which means that the Hong Kong-based property development company has neither ceased operations nor commenced formal legal procedures such as filing for bankruptcy.

'A Technical Default for a Long Time Already'
Evergrande has total liabilities worth about $300 billion. Included in this figure are about $19 billion in bonds that are denominated in U.S. dollars and issued offshore, a larger amount than is outstanding from any other Chinese property development company.

"We should have been calling this a technical default for a long time already, but nobody dared," according to Alicia Garcia-Herrero, the chief economist for the Asia-Pacific region at France-based investment banking firm Natixis. She added: "China is not making it clear because there's no pressure to make it clear. Ratings [agencies] should be pushing. Some investors did push. Nobody wants to label this because they don't want to bear the consequences. Everybody's trying to increase what they can get out of it."

Garcia-Herrero also indicated that there is an advantage to Evergrande and its investors if the company can avoid being labeled officially as in default. Specifically, not being tagged in this fashion should reduce the cost at which Evergrande can restructure its debt.

'Default Looks Inevitable'
While S&P Global Ratings has not yet officially declared Evergrande to be in default, it has issued a warning. On Dec. 7, 2021, S&P issued a report asserting that "default looks inevitable for Evergrande."1

On Dec. 3, 2021, Evergrande had issued its own warning that it was struggling to meet its financial obligations and that it was planning to "actively engage with offshore creditors" about debt restructuring. Creditors had demanded payments of about $260 million.

Evergrande Chairman Sells Shares
Evergrande Group chairman Hui Ka Yan has sold 277.8 million shares in his company, reducing his ownership stake by slightly over 2% from 61.88% to 59.78%. He also sold 1.2 billion shares in November, his first sale since the company went public in 2009.

"Steps have been taken to enforce a security interest in the shares, or rights to such shares held as security against" Hui, according to the regulatory filing that disclosed the transaction.

'Drawn Out' Impact, Not a Shock
Garcia-Herrero of Natixis anticipates that, with help from the Chinese government, the problems encountered by Evergrande and other Chinese property developers will have have a negative impact on that country's economic growth that is drawn out over time, rather than a sharp and immediate shock. She also expects that the impact on the financial markets will be limited because the holders of Evergrande's debt are mainly "high net worth individuals, [who] are holding Evergrande to the maturity, to the restructuring point."

However, Japan-based global financial services firm Nomura Group warns in its 2022 global economic outlook report that measures being taken by the Chinese government to curb speculation in the property market, in tandem with its carbon neutrality drive, may "result in a vicious cycle of rising defaults and slower growth in North China."

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
Israeli Airstrike in Yemen Kills Houthi Prime Minister
After the Shock of Defeat, Iranians Yearn for Change
YouTube Altered Content by Artificial Intelligence – Without Permission
Iran Faces Escalating Water Crisis as Protests Spread
More Than Half a Million Evacuated as Typhoon Kajiki Heads for Vietnam
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Miles Worth Billions: How Airlines Generate Huge Profits
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
Beijing is moving into gold and other assets, diversifying away from the dollar
Cristiano Ronaldo Makes Surprise Stop at New Hong Kong Museum
Zelenskyy to Visit Washington after Trump–Putin Summit Yields No Agreement
High-Stakes Trump-Putin Summit on Ukraine Underway in Alaska
Iranian Protection Offers Chinese Vehicle Shipments a Cost Advantage over Japanese and Korean Makers
Saudi Arabia accelerates renewables to curb domestic oil use
Cristiano Ronaldo and Georgina Rodríguez announce engagement
Asia-Pacific dominates world’s busiest flight routes, with South Korea’s Jeju–Seoul corridor leading global rankings
Private Welsh island with 19th-century fort listed for sale at over £3 million
Sam Altman challenges Elon Musk with plans for Neuralink rival
Australia to Recognize the State of Palestine at UN Assembly
The Collapse of the Programmer Dream: AI Experts Now the Real High-Earners
Armenia and Azerbaijan to Sign US-Brokered Framework Agreement for Nakhchivan Corridor
British Labour Government Utilizes Counter-Terrorism Tools for Social Media Monitoring Against Legitimate Critics
WhatsApp Deletes 6.8 Million Scam Accounts Amid Rising Global Fraud
Nine people have been hospitalized and dozens of salmonella cases have been reported after an outbreak of infections linked to certain brands of pistachios and pistachio-containing products, according to the Public Health Agency of Canada
Texas Residents Face Water Restrictions While AI Data Centers Consume Millions of Gallons
Tariffs, AI, and the Shifting U.S. Macro Landscape: Navigating a New Economic Regime
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
OpenAI’s Bold Bet: Teaching AI to Think, Not Just Chat
BP’s Largest Oil and Gas Find in 25 Years Uncovered Offshore Brazil
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Germany’s Economic Breakdown and the Return of Militarization: From Industrial Collapse to a New Offensive Strategy
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
×