Worries about the giant developer’s ability to repay its debt and a total of $300 billion in liabilities have put global investors on edge. Beyond the company itself, there are worries about a potential spillover into the rest of China’s real estate industry or economy. — CNBC
Evegrande missed another round of payments last Monday, setting it back again ahead of Wednesday’s scheduled $47.5 million interest payment. Investors are blindly looking for a government bailout, but financial experts remain uncertain as to its prospects. The company says it plans to go forward with a 12 billion yuan ($1.86 billion) football stadium project from Gensler in spite of the huge debts it owes to more than 250 different institutions worldwide.
Evergrande was recently behind the financing for Harvard GSD’s HouseZero initiative. Currently, the company has an estimated 800 projects underway in mainland China in addition to plans announced earlier in the year that would provide 268 individual units in a $4 billion “Versailles-like” villa along Hong Kong’s Yueng Long wetland.
2 Comments
The real problem here is not for China but for foreign investors. That's the 'spillover' of concern.
I would be surprised if the Chinese government bailed them out. Doing so would be straight out of the capitalist playbook: privatize the gains, subsidize the losses. Rewarding those who fail perpetuates their behavior.
China can easily manage internal finance while waving bye-bye to foreign (US) investors. The situation becomes more complicated for dealing with the Eurozone and other countries where China is building good relations.
"Houston, we have a problem!"
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