Payment loan

Evergrande defaults on $ 260 million loan – what does this mean for Australia?


Chinese real estate giant Evergrande was officially declared in default for the first time, as it admitted it would not be able to repay its debts.

Fitch Ratings downgraded the real estate developer Thursday night to a restricted default rating after it failed to repay its bond debt.

The company was given a one-month grace period to deal with repayments – to the tune of A $ 260 million – but the credit assessor said Evergrande had not responded to requests for confirmation from payment.

“Non-payment is consistent with a rating of” RD “(restricted default), meaning the uncorrected expiration of any grace period, repair period or default forbearance period applicable as a result of a default. on a significant financial obligation, ”Fitch said.

Struggling Chinese real estate giant Evergrande officially declared in default after failing to make more than $ 1.2 billion in bond repayments

The downgrade could then trigger defaults on Evergrande’s larger A $ 420 billion debt.

Evergrande made a statement to the Hong Kong Stock Exchange on Friday after receiving a new demand from creditors to pay A $ 370 million.

“In view of the current state of liquidity, there can be no guarantee that the group will have sufficient funds to continue to meet its financial obligations,” he said.

Struggling Chinese real estate giant Evergrande made a statement to the Hong Kong Stock Exchange on Friday after receiving a new demand from creditors to pay A $ 370 million

Struggling Chinese real estate giant Evergrande made a statement to the Hong Kong Stock Exchange on Friday after receiving a new demand from creditors to pay A $ 370 million

The admission prompted the government of southern China’s Guangdong Province to summon Evergrande founder Xu Jiayin for a meeting with Communist Party officials.

The Evergrande woes have sparked a Chinese government crackdown on home loans, weighing on the value of Australia’s biggest export, iron ore, which has halved in just four months.

The Mr Xu company founded in 1996 is based in the city of Shenzhen in mainland China, near Hong Kong.

The admission of Evergrande sent its share price plunging to its lowest level in 11 years on Monday, losing 87% of its value since the start of the year.

The company had disclosed its $ 300 billion in liabilities in recent days, saying it would “actively engage” offshore creditors as part of a restructuring plan.

Bloomberg reporter Srinivasan Sivabalan Tweeted Thursday that the country’s real estate debt crisis has “passed a red line”.

“Evergrande has defaulted on its dollar-denominated debt,” Sivabalan wrote.

“About 95% of Evergrande’s $ 300 billion debt is local. The default of $ 19.2 in dollar bonds is dragging foreigners into China’s problems. Clearly indicates that no bailout is forthcoming.

GlobalData, a UK-based analytics company, said Evergrande’s defaults will slow economic growth in China, Australia’s largest trading partner.

Gargi Rao, an economic research analyst, said the Chinese government’s crackdown on home loans would hamper investment as the Communist Party ordered a cut in steel production to meet climate change targets.

The admission prompted the government of southern China's Guangdong to summon Evergrande's founder Xu Jiayin for a meeting with Communist Party officials.

The admission prompted the government of southern China’s Guangdong to summon Evergrande’s founder Xu Jiayin for a meeting with Communist Party officials.

“Policies to adopt a zero Covid-19 strategy along with a drastic effort to reduce carbon emissions will likely cast a shadow over the prospects for economic growth in the coming quarters,” she said.

Since the end of July, the spot price of iron ore, the raw material used to make steel, has more than halved, from US $ 200 per tonne to US $ 99 on Monday.

A slowdown in China is already affecting demand for Australia’s largest export.

Despite this, Australia continues to have monthly trade surpluses and quarterly current account deficits where exports are worth more than imports.

Oxford Economics expects the woes of Evergrande to weigh on China’s economic growth in the first half of 2022.

In March 2015, he was at the center of a political storm in Australia after it emerged that as the 15th richest man in China he had not applied for permission to buy Villa del Mare in Point Piper in Sydney Harbor.

In March 2015, he was at the center of a political storm in Australia after it emerged that as the 15th richest man in China he had not applied for permission to buy Villa del Mare in Point Piper in Sydney Harbor.

“The housing slowdown and China’s stance on Covid are weighing on growth, especially in early 2022,” economists Louis Kuijs and Tommy Wu said.

“We see the real estate slowdown continuing into the first half of 2022, before anxiety about developer defaults subsides and a modest recovery takes hold.

“We don’t expect China to switch to a Covid containment approach until late 2022 at the earliest, and thus project modest growth in consumption.”

Mr. Xu, president of Evergrande, has long been renowned for leading a lavish lifestyle.

In March 2015, he was at the center of a political storm in Australia after it emerged that as the 15th richest man in China he had not applied for permission to buy Villa del Mare in Point Piper in Sydney Harbor.

Evergrande is in debt of $ 420 billion and has already missed a series of annual interest payments owed to bondholders.  A 30-day grace period for a November 30 deadline expired on Monday

Evergrande is in debt of $ 420 billion and has already missed a series of annual interest payments owed to bondholders. A 30-day grace period for a November 30 deadline expired on Monday

This part of the eastern suburbs waterfront was home to future Prime Minister Malcolm Turnbull and Aussie Home Loans founder John Symond.

Mr. Xu loved the neighborhood so much that he bought a six-bedroom Mediterranean-style residential house on Wolseley Road, in Australia’s most expensive and exclusive suburb.

Problem is, he forgot to tell the Foreign Investment Review Board about his November 2014 purchase of a Mediterranean-style six-bedroom apartment house on Wolseley Road, in the most expensive and most expensive suburb. exclusive from Australia.

Then Liberal Treasurer Joe Hockey, in the final months of Tony Abbott’s tenure as Prime Minister, announced the forced sale of Villa de Mare, less than six months after Double Bay’s LJ Hooker oversaw the trophy transaction.

Under Australian law, foreigners must seek approval from the FIRB before purchasing residential real estate.