Weeks ago, global markets were nervous about the possible collapse of China's Evergrande Group, the world's most indebted real estate developer, and everyone feared the impact of debts totaling $300 billion on China's economy in general, if Beijing did not provide a rescue plan for the company.
Although the turmoil in Evergrande has eased recently after the company made payments on multi-million dollar bonds, its financial problems have already sparked a broader panic that has contributed to a wave of defaults among other developers, whose problems are growing, according to the report. The New York Times, USA.
It is becoming harder to find money because the cost of borrowing has gone up, fewer people are buying apartments and property values are declining, the paper said.
CAISA Group, the first Chinese developer to default on foreign debt in six years, told investors last week that it was facing "unprecedented pressure".
The pressure on Chinese real estate developers has increased to the point that the US Federal Reserve referred to it as a potential risk to the US economy in a report this week.
With Chinese property developers failing to meet their core financial commitments, experts warn that Evergrande's problems are already having a serious spillover effect.
A report published on Bloomberg says that the company faces a major test, Wednesday, as a debt of $ 150 million is due, and it is unclear how the company will be able to pay it “when the company has no money, no one is buying its apartments, and a very long queue of creditors stands outside its doors.”
According to the network, the way Evergrande will deal with this debt, may deliver messages to other creditors.
More than a million homebuyers await unfinished apartments, and the company owes money to many builders, painters and employees.
The company began granting vacations for a year, with a salary of less than ten percent of the usual salary for many of its employees, and told them that it would use the money to pay the company's debts or to finish the apartments due for delivery.
CNN said Evergrande is looking at about $8 billion in debt obligations to foreign investors over the next year. The company's billionaire founder and chairman, Xu Jia-yin, may have to pay at least some of that out of his own pocket.
Concerns have been raised that the real estate developer will default and spark a spark that affects global markets, and in its latest financial stability report, the US Federal Reserve warned that "pressures in China's real estate sector could strain the Chinese financial system, with potential repercussions for United States," according to the network.
The US Wall Street Journal said that "the largest sale in China's international junk bond market wiped out about a third of bondholders' wealth in just six months."
"This sharp and rapid decline shows how regulatory restrictions on borrowing, largely unraveling credit markets, and slowing home sales have combined to pressure more Chinese property developers, who account for most of China's high-return investment," she added.
China is enacting new measures to change how the economy operates and reduce the power of executives. Driven by a desire to consolidate state control, these changes, according to the New York Times, mark the end of a golden age of private business that made the country a formidable manufacturing power.
The newspaper said that China's leader, Xi Jinping, is reshaping the business world in China in his own image, above all, and this means control.
Already implementing many measures, the Chinese government has tightened internet control in the country, declared all financial transactions involving cryptocurrency illegal and detained top CEOs of troubled companies, meanwhile, China's largest developer, Evergrande, is reeling without any News from those responsible for the rescue operation.
What China does next will be important, the newspaper said. If Chinese officials rescue the Evergrande, they risk sending the message that some companies are still too big to fail, and if not, as many as 1.6 million homebuyers are waiting for apartments. Unfinished and hundreds of small businesses, creditors and banks could lose their money."
The Chinese authorities have tried to instill confidence and reassure investors by describing Evergrande's risks as manageable and pledging to ease Chinese capital controls on the movement of money into and out of the country, which would help Evergrande and other property developers make payments to foreign creditors.
While Beijing has indicated earlier that it will not step in to bail out the Evergrande - part of a broader strategy to clean up the sector's debt problem - the Chinese authorities have a history of quietly bailing out the country's giants.
Before the Evergrande, the Chinese authorities rescued HNA Transport and Hotel Company, after news spread that a number of its managers had been detained.
Like HNA, Evergrande has hired restructuring experts, but little is known about whether the authorities plan to break up the company.
Some Evergrande investors had a chance to learn more about the company's daunting challenges during a recent meeting, but they signed confidentiality agreements ordering them to keep information confidential before a potential restructuring.
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