Evergrande defaulted on its debt for the third time

The China estate giant Evergrande defaulted on its debts again this month, failing to pay its debts for 3 times. The crisis spread to the whole Chinese real estate market and caused many Chinese real estate developers to fall into debt crisis. According to Reuters, if Evergrande fails to make an interest payment on its US dollar debt within 30 days of its due on Thursday, it could default on its debt, which could ripple through China’s property market and have a bigger impact on the country’s economy.

Evergrande failed twice to pay off nearly $131 million in debt at the end of last month, and on Monday failed to pay interest on another $148 million in debt. The debt problem has spread throughout China’s real estate market, among which real estate developers such as New Year, Contemporary Property and New Holdings have failed to repay their debts or postponed their debt repayment dates, again hitting China’s high-yield bond market.

Evergrande currently has $300 billion in debt and investors expect a greater chance of a full default if it fails to make payments. Among them are market analysts at the foreign Exchange trading company, who said in a research note released on Monday that the coming weeks will be critical in determining whether Evergrande will make the first missed offshore bond interest payment or communicate with the outside world. However, the analysis is pessimistic, as Evergrande’s chances of repaying its debts are extremely slim, considering the number of “walks” it has made in the past two times.

According to the Wall Street Journal, some economists say the total debt of China’s real estate market exceeds $5 trillion, which is larger than the world’s third largest economy, Japan’s total economic output in 2020.

China’s real estate market is Mired in debt crises, and nearly 40 percent of Chinese real estate companies that have borrowed from international bond investors have sounded the alarm. In addition to Evergrande, real estate group New Year was also accused of defaulting on its debt, failing to repay $206 million in bonds on April 4. And Contemporary Land, a small property developer, postponed its debt repayments by three months, postponing a $250m bond due on November 25 to “avoid any potential default on payments”. Sony holdings was due to repay the rest of this year’s debt next week, but said it did not have enough money to repay, and is currently negotiating repayment arrangements with banks and other stakeholders.

However, some of Evergrande’s offshore creditors are also quite worried about the situation. In addition to the lack of transparent internal information of Evergrande, other creditors question that Evergrande announced last month to sell 1.5 billion DOLLARS of shares of Liaoning Shengjing Bank to deal with the debt problem, which seems to only care about domestic creditors. The creditors are considering various claims, including legal claims from the Cayman Islands, where Evergrande’s listed parent company is incorporated.