Evergrande: Which giant company or bank is next?

Evergrande defaults have sparked a backlash in the Chinese economy as tens of thousands of households investing in high-yield investments are forced to pay the amount corresponding to payments lost by the Chinese real estate giant.

More specifically, according to Bloomberg : 

Citing sources close to the developments, thousands of small investors appear to have sunk into the downward spiral caused by the default of hundreds of millions of dollars from Evergrande. 

Many of them follow the path of about 70,000 who have invested in company products and see their money disappear. 

According to the Bloomberg publication, which does not name its sources apart from the investors who were forced to repay Evergrande's creditors with their funds, many are negotiating with the company to extend overdue debts' repayment period.

With overpayments of Evergrande products sold to private investors exceeding $ 6.2 billion (about 40 billion yuan), the national backlash is already high, with more pressure on the Chinese government to find a solution and avoid further unrest.

"The Chinese government will promote social stability as one of its top priorities," James Fleng, head of the Chinese fund Poseidon Capital Group, told Bloomberg.

At the same time, it is noted that the payments that are in view for Evergrande for the fourth quarter of the year amount to 1.8 billion dollars, while for the next year, to 4 billion dollars, according to the data provider Use Trust.

Don't panic! 

In this climate, the Chinese government, expressing its concern for maintaining financial stability, forced the Evergrande to meet most of its obligations. At a recent meeting, regulators urged the company to complete the ongoing projects and repay private investors while preventing the default of its dollar bonds. 

At the same time, for its part, the billionaire president of Evergrande, Hui Ka Yan, told staff last week that buyers of its investment products would be repaid.

However, with the company's total debt exceeding $ 300 billion, at the same time that the cash is disappearing, it needs to be clarified how the company will avoid the worst.

It is recalled that Evergande has already missed the September 23, 2021, deadline to pay $ 83.5 million for a $ 2 billion bond that expired last March.

This article is for informational purposes only and does not replace specialized consulting services with professional experts.

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