HomeReal EstateChina Evergrande default is highly likely, S&P says

China Evergrande default is highly likely, S&P says

The emblem of China Evergrande is seen at exterior China Evergrande Centre constructing in Hong Kong, China September 23, 2021.

Tyrone Siu | Reuters

BEIJING — Extremely indebted property developer China Evergrande will seemingly default as a result of the corporate has basically misplaced its most important enterprise, S&P World Scores analysts mentioned in a report Thursday.

Evergrande was China’s second-largest developer by gross sales final yr. Like many Chinese language builders, the corporate offered residences to shoppers earlier than completion, serving to to generate capital for future initiatives.

However that money circulation cycle is operating into issues. Regardless of the corporate’s skill to promote property and discover methods to make funds in time, “Evergrande’s large debt will meet up with it,” the S&P report mentioned.

“The agency has misplaced the capability to promote new properties, which suggests its most important enterprise mannequin is successfully defunct. This makes full compensation of its money owed unlikely,” the analysts mentioned.

“We nonetheless imagine an Evergrande default is extremely seemingly,” the report mentioned.

Evergrande didn’t instantly reply to a CNBC request for touch upon the S&P report.

Whereas the developer has managed to stave off default with last-minute funds, the analysts mentioned Evergrande’s larger take a look at will probably be when $3.5 billion comes due for U.S. dollar-denominated notes in March and April subsequent yr.

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