December 7, 2021

Beyond Going Long

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Evergrande paid the interest on the debt and resumed work

Evergrande paid the interest on the debt and resumed work

China’s Evergrande Development Group announced Sunday that it has resumed work on more than 10 projects in Shenzhen, Tong Quan and other cities. The statement comes after news that it managed to avoid bankruptcy when it paid interest on bonds at the last minute.

Evergrande, which has commitments estimated at about $300 billion, said in a contribution to its Wechat account that some projects have entered the interior decoration phase while it was recently completing construction of other buildings. The report also included several photos of construction workers on various projects with time and date stamps.

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The company paid $83.5 million in bond interest on Saturday (October 23) before the deadline. He has bought time to find a way out of the debt crisis, which could shake the world’s second largest economy.

The money was actually due to be paid on September 23 with a possible 30-day delay. If Evergrande fails to raise funds in a timely manner, a formal insolvency declaration will appear.

Evergrande is the most indebted real estate company in China. He desperately needs to raise money to pay more interest on the bonds in the coming weeks and months. The group is so large that some experts fear the risk of “contagion” spreading in and out of the Chinese economy.

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Evergrande’s difficulties have already weighed on China’s $5 trillion real estate sector, which by some measures accounts for a quarter of economic performance, with a spate of default notices, credit rating downgrades and plummeting corporate bonds.

Global financial markets are also watching the Evergrande debt crisis, which fears the contagion.

Evergrande also announced Friday (October 22) that it plans to prioritize the electric vehicle business over real estate in the future.

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