June 6, 2023

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Will Evergrand end the crisis before the bond interest agreement deteriorates?

Will Evergrand end the crisis before the bond interest agreement deteriorates?

In a statement to the Shenzhen Stock Exchange in southern China, the huge debt-ridden real estate group, one of its branches, “Henikta Real Estate”, said it was negotiating a plan to pay interest on the bonds. 2025.

Bloomberg Report, Evergrande The bonds, which mature on Thursday, will repay 232 million yuan, or about $ 36 million, the 5.8 percent levied on the domestic bond market.

Evergrande Group, the second largest real estate developer in China and involved in other industries such as renewable energy and automobiles, is facing huge installments in debt in excess of $ 300 billion.

Prime Investment Bank, according to a research note, is indebted to more than 170 Chinese banks and financial institutions, making it the largest debt burden of any real estate management or development company listed on the global stock exchanges.

Positive trend

Ahmed S., a financial and economic analyst, believes in exclusive reports to Sky News Arabia that the deal will see the negative effects of the current crisis, but will take longer to realize an improvement.

The Corona epidemic has severely affected the financial position of the company, causing many outstanding obligations, while the Chinese company has not been able to meet them, but the positive thing on the other hand is that the company has a lot of revenue from customers, and by verifying, we will find that a decline beyond that can be avoided. With more time, in light of expectations, the Chinese government will contribute to tackling the crisis.

“It is very difficult for this giant group to fall or the Chinese government to allow it,” he added.

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But Chinese officials have not yet clarified whether it will help improve The financial position of the company Of that, 1.4 million homes have not yet been completed.


According to Gary Duggan of the Global CIO Consultancy in Singapore, the announcement of the deal “will help, and I hope it will ease a little.” Market volatility And retreated. “

“But hopefully the market will really look at opportunities to restructure Evergrande to return,” he told Bloomberg.

However, Honey Tawfiq, a finance and economist, told Sky News Arabia in a statement that the agreement to pay interest on the securities was “a step from a group of measures to protect the Chinese company.”

He added, “It is quite possible that this deal will solve a temporary problem, but will have to overcome the obligations and pay the company new capital.”

He explained that the financial position of the Chinese group was needed Restoration In the long run, one of the solutions is that the intervention of the Chinese government may be a partnership and in many ways, because the payment of interest on securities is not as we have relied heavily on to ensure the improvement of financial indicators.

Fears go away

As the fears of the great impact of the crisis faded, I opened up US stocks Conversely, investors are then waiting for policy notes from the US Federal Reserve meeting.

Economist Honey Tawfiq said: “Global markets responded to the Evergrande crisis after great fears because it has seen stability in trade today, while its impact on China has been even greater.

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He added that everyone is waiting for the US Federal Reserve meeting to reveal the stimulus plan and interest rates.

The Lehman brothers will not be done again

In the wake of the outbreak of the crisis, global fears have prevailed in recent hours Evergrande Group Its impact on the giant Chinese real estate and banking sector threatens to turn into a global financial crisis similar to the 2008 collapse of the US Lehman Brothers Bank.

These fears have caused a significant decline in global stock markets in recent days, before the last hours saw slight improvement.

The Dow Jones Industrial Average rose 87.03 points, or 0.26 percent, to 3,406.87 points.

Meanwhile, the Standard & Poor’s 500 Index was up 13.24 points, or 0.30 per cent, at 4,367.43.

Ahmed S, an economist, stressed that “the Evergreen crisis is not the same as it was in 2008. There is no comparison.”

Ezz hopes that the Chinese government and all major stakeholders will intervene in this period of so-called quantitative easing, as the Beijing government will be among the victims. The decline of the real estate group.

This was pointed out by Al-Hassan Ali Bakr, chief economist at Evest, in a report on Sky News Arabia.Evergreen crisis, Has a specific character that differs from previous crises, and some have tried to compare the situation with the “Lehman Brothers” crisis, but if we look more precisely, the current crisis system is fundamentally different from the 2008 crisis and the extent of its impact on various sectors, whether real estate or the global banking sector .

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