After Fitch Ratings downgraded China Evergrande and some of its subsidiaries to “Restricted Default” status on Thursday, there was for the first time, widespread acknowledgement of the Chinese property giant’s failure to meet its debt obligations.
“The downgrades reflect the non-payment of coupons due 6 November 2021 for Tianji’s USD645 million 13% bonds and USD590 million 13.75% bonds after the grace period lapsed on 6 December.
What’s next for China Evergrande?
While Evergrande has officially been labelled a defaulter by one of the world’s most respected and most powerful ratings agencies, the company is yet to default in any offical legal sense.
From here, if Evergrande’s directors respect and acknowledge Fitch Ratings’ view, the next step would be for them to file for insolvency, which would see the company liquidated.
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