China Evergrande defaulted on debt, Fitch says – .

China Evergrande defaulted on debt, Fitch says – .

The next steps were not immediately clear. Evergrande has previously said he will “actively engage” with his foreign creditors to work out a restructuring plan – an often long and tedious process that can involve breaking up a business and selling off parts to pay everyone. .

But any decision would require the blessing of the Chinese government, which fears a sudden dismantling of the business could hit the country’s financial system or potentially the many homeowners in China who have already paid for apartments to be built.

Earlier this week, Evergrande said officials from several state-backed institutions had joined a risk committee that would help the company restructure.

While the appointment of Fitch formalized the default of Evergrande, the market had long anticipated this moment. For months, Evergrande struggled to meet the bond payment deadlines. For many, it was only a matter of time before the company ran out of money to pay its bills.

“We all expected that Evergrande wouldn’t be able to pull a rabbit out of its hat,” said Michel Löwy, Managing Director of SC Lowy, an investment firm with a small position in Evergrande bonds.


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