Tall & Urban News

Chinese Developer on the Edge of Default Causes Widespread Concern

The Evergrande Center in Chongqing is among Evergrande's 1,300 projects in 280 cities. Image credit: MNXANL, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons
The Evergrande Center in Chongqing is among Evergrande's 1,300 projects in 280 cities. Image credit: MNXANL, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons
24 September 2021

Chinese property developer Evergrande has entered a 30-day grace period after missing a bond interest payment deadline, causing speculation on the potential economic ripple effects outside of China if the firm defaults.

The company has a debt load around US$305 billion and is one of China’s biggest private sector conglomerates, with 1,300 projects in 280 cities, according to an article in The Guardian.  

While some Chinese banks have made statements to indicate they could weather a default by the developer, economists speculate that the central government’s focus would be to make sure property owners get the residences they paid for rather than bail out any creditors.

There are 10 additional Chinese developers with combined contract sales 2.7 times as large as Evergrande with potentially risky positions as well, according to The Guardian. Rating agencies have downgraded their forecasts for China’s economic growth due to concerns around a slowdown in the country’s housing market and the fallout from the Evergrande situation.

For more on this story, go to The Guardian.