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Although Chinese giant Evergrande has announced a deal to avoid the default, markets remain nervous due to the real estate company’s huge debts.
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And earlier this week, global markets were rocked by fears of ‘Evergrand’ bankruptcy, but the company today focused on reassuring markets, announcing it had struck a deal with bondholders to avoid default.
The real estate company, which oversees the bankruptcy, said it would pay interest on a small portion of its debt, and after the announcement, stock exchanges, including European ones, rose, but “Evergrand” failed. to reassure the financial markets, because the concern still prevails because of the significant indebtedness, because the company is in debt of 260 billion euros (300 billion dollars).
Markets fear a repeat of what happened with Lehman Brothers, whose bankruptcy sparked the financial crisis in 2008 and plunged the world into the worst economic crisis since the 1930s.
Experts call the situation around the company a “bomb”, expressing their hope that a solution to the debts of “Evergrand” will be found, the attention is now turning to the Chinese government, which has not indicated. ‘it would help the corporate giant.
Expert Gary Duggan of Singapore-based investment advisory firm “Global CIO” believes that the announcement of the partial payment “will help, and it is hoped that it will reduce some market volatility and decline, but so that the confidence is really returning, the market must see the possibilities for restructuring (Evergrande).
Why is everyone talking about the collapse of Evergrande?
The debts of the giant company amount to 300 billion dollars, and it has 1,300 projects in more than 280 cities, and “Evergrand” owes about 130 banks and nearly 120 nonbank financial institutions, and about 50% of the debts of society are in favor of entrepreneurs.
And Evergrande’s reach goes beyond just building houses, as its owner is billionaire Hui Ka Yan, who contributes to the electric car business, media production, mineral water, and football. .
According to “Bloomberg”, the company’s troubles began in 2020, when it was reported that it had sent a letter to the Guangdong provincial government warning its officials of a possible liquidity crunch, and the crisis has was avoided after a group of investors waived its right to impose a $ 13 billion payment, but no. There is still a lot of debt and global rating agencies are warning about defaults.
The company’s stock has fallen sharply since the start of this year, falling from HK $ 17.26, recorded at the start of the year, to HK $ 2.27. On Monday, Evergrande’s stock fell to its lowest level in 11 years.
Source: RT + AFP + Bloomberg
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