October 7, 2021
2 mins read

EVERGRANDE: Chinese Economy Feels The pain

Fantasia’s default shows that Evergrande’s troubles “could dampen the sentiment for homebuyers, developers and banks, causing more developers to run into a liquidity crunch,”…reports Asian Lite News

 A Chinese developer of luxury apartments missed $315 million in payments to lenders, sparking fears that financial strains in the country’s outsized proprerty sector are spreading beyond the troubled Evergrande conglomerate, CNN reported.

Fantasia Holdings, a Shenzhen-based developer, missed repaying $206 million worth of bonds that matured Monday, the company said in a stock exchange it is now assessing “the potential impact on the financial condition and cash position of the group”.

Separately, the property management unit of Country Garden, China’s second largest developer by sales after Evergrande, said in a filing that Fantasia had failed to repay a company loan of about 700 million yuan ($109 million). Fantasia had informed the company that it would probably “default on [its] external debts,” Country Garden Services added.

S&P and Moody’s slapped “default” credit ratings on Fantasia and said the non-payment of principal would likely also put the company in default on its remaining bonds, the report said.

https://www.youtube.com/watch?v=uUWcgrdRBT0

“The downgrade follows Fantasia’s announcement… that it had missed payment on its $205.7 million bond due on the same day, and reflects our expectation of weak recovery prospects for Fantasia’s bondholders after its default,” said Celine Yang, a senior analyst at Moody’s.

The news revived fears that debt woes are deepening in China’s overextended property sector, which accounted for 29 per cent of outstanding loans issued by Chinese banks in yuan in the second quarter of 2021. The sector is vital to China’s economy – real estate and related industries account for around 30 per cent of GDP, the report said.

“The [Chinese] property sector is worrisome,” wrote Larry Hu and Xinyu Ji, China economists for Macquarie Group, in a research note on Tuesday.

Fantasia’s default shows that Evergrande’s troubles “could dampen the sentiment for homebuyers, developers and banks, causing more developers to run into a liquidity crunch,” they said, the report added.

The outlook for the Chinese property market is not encouraging. Property sales in the top 30 Chinese cities plunged 31 per cent in September from a year ago, according to Macquarie’s estimates.

ALSO READ: China’s PCR test purchases spiked before first Covid cases

ALSO READ: China ties: Lanka soothes India

Previous Story

UK readying payment systems to charge for rapid Covid-19 testing

Next Story

PM vows ‘long overdue’ revamp of UK’s post-Brexit economy

Latest from -Top News

Texas flash floods kill at least 24; Trump vows help

President calls tragedy ‘shocking’ as search for missing continues overnight At least 24 people have died in Kerr County, Texas, after catastrophic flooding swept through the region, prompting a large-scale rescue and

UK MPs Slam Pakistan Over Minority Abuses

Minority communities such as Shias, Christians, Hindus, and Ahmadis continue to face harassment, violence, and intimidation. In many cases, law enforcement either turns a blind eye or enables the attacks through inaction…reports

Words Won’t Stop China, Quad Must Deliver

 If the Quad aims to counterbalance China’s growing influence, it must expand its focus beyond the maritime domain and address the continental dynamics of the Indo-Pacific…writes Imran Khurshid Despite early concerns that
Go toTop

Don't Miss

India, China to hold border talks on Sunday

India and China will discuss phase-III of disengagement and also

FBI uncovers dramatic escalation of Chinese espionage on US soil

Among the most alarming things the FBI uncovered pertains to