Fitch Ratings: Evergrande In “Restricted Default” After Failing To Pay

Fitch Ratings: Evergrande In “Restricted Default” After Failing To Pay
geralt / Pixabay

Credit rating agency Fitch Ratings has downgraded fallen real estate developer China Evergrande Group (HKG:3333) to “restricted default” after it failed to meet its financial obligations. Analysts have been warning that the default could ignite a property market crisis in the Asian giant.

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

Q3 2021 hedge fund letters, conferences and more

Gates Capital Returns 32.7% Tries To Do “Fewer Things Better”

Gates Capital Management's Excess Cash Flow (ECF) Value Funds have returned 14.5% net over the past 25 years, and in 2021, the fund manager continued to outperform. Due to an "absence of large mistakes" during the year, coupled with an "attractive environment for corporate events," the group's flagship ECF Value Fund, L.P returned 32.7% last Read More

Evergrande's Default

As reported by CNN, Fitch Ratings has downgraded Evergrande has defaulted on its debt as the company’s month-long due payments went unannounced once the grace period expired Monday. According to the news outlet, “Fitch said the downgrade reflects the company's inability to pay interest due earlier this week on two dollar-denominated bonds.”

As Evergrande’s liabilities rank at $300 billion, the default is anticipated to impact the country’s financial system and send shockwaves in the global economy as warned by the U.S. Federal Reserve.

The developer had alerted of the no-payment possibility in a stock exchange filing Friday last week, by stating it might not have enough money to cancel its debts. It also asserted it was weighing to “actively engage” with creditors abroad to devise a restructuring plan.

“In another filing Monday, the company said it would set up a risk management committee that would be headed by Evergrande's chairman and founder Xu Jiayin to focus on ‘mitigating and eliminating’ future risks,” CNN informs.

The Man Behind The Company

The Evergrande crisis has brought Hui Ka Yan —whose actual name is Xu Jiayin— the company’s founder, to the limelight. He was born in a rural area in China to become one of the country's greatest tycoons.

In his youth, he worked as a warehouseman and in a cement factory, and in an interview, he said: “at that time, my greatest wish was to get out of the field, find a job and be able to eat better.”

Hui Ka Yan managed to enter university in Wuhan and study metallurgy. Upon graduation, he began to move up in various jobs in the manufacturing and steel industries and settled in Shenzhen, in 1990, and six years later founded Evergrande.

Evergrande's success was immediate. In its first real estate project, it managed to sell 323 apartments in one afternoon for 80 million yuan. In its rise and one of its best moments, Evergrande hit the Hong Kong Stock Exchange in 2009, raising the equivalent of $9 billion in its initial public offering.

Updated on

Cristian Bustos is senior editor for Previously, he was the news correspondent in Germany for Colombian radio broadcast Blu Radio, where he covered the 2017 German federal election and the 2017 G20 Hamburg summit. He was also public relations consultant to EY and HAYS, and has covered a wide range of topics including business, finance, and international relations, as well as verticals such as automotive, aerospace and renewable energy. Email him at [email protected]
Previous article The Value of Play-to-Earn
Next article These Are The Ten Biggest Rebase Cryptocurrencies

No posts to display