China Nears a Reckoning as Property Firms Face Tough Deadlines [View all]

[Zorro]

Source: New York Times

Evergrande and Kaisa must come up with hundreds of millions of dollars in days. Beijing sought to reassure markets overall, but signaled it might let Evergrande fail.

China’s debt-loaded property market is headed for a reckoning, as China Evergrande Group and another troubled housing developer face deadlines for millions of dollars’ worth of payments in a test of Beijing’s narrative that it can handle the threat to the Chinese economy.

Evergrande, with bills totaling $300 billion or more, will need to come up with more than $82 million in cash by the end of Monday in the United States to fend off creditors. The developer said late last week that it was unable to make a separate payment worth $260 million, an indication investors took to mean the beginning of its eventual demise. Its shares tumbled by 20 percent on Monday in Asia.

The other developer in distress, Kaisa Group, must pay bondholders $400 million on Tuesday after it said it failed last week to get approval from investors to renegotiate the terms.

China’s property sector has kept global markets on edge for months, as developers have struggled to find cash to pay their soaring debts. They have been hampered by slowing demand from home buyers, falling property prices in many Chinese cities and Beijing’s crackdown on excessive bank lending.

Read more: https://www.nytimes.com/2021/12/06/business/china-evergrande-kaisa-property.html