Key Sentence:
- Investors were left in the dark after ailing real estate giant Evergrande missed the $83.5m (£61m) interest rate deadline.
- The Chinese company has now to announce the payment, which should be made by Thursday.
Earlier this week, the company declare Evergrande that it had agreed to pay an additional $35.9 million in interest. Evergrande was down nearly 12% in Hong Kong on Friday after rising more than 17% the previous day.
What is Evergrande, also is it too big to fail?
Meanwhile, Chinese authorities warned local authorities to prepare for the possible failure of Evergrande. According to the Wall Street Journal, the mandated action was described as “preparing for a possible storm,” citing officials familiar with the discussions.
Some investors saw the move as an additional sign that the Chinese government was not ready to bail out the real estate crisis giant. The Chinese government has yet to make a significant report on Evergrande. And state media has given a slight hint of what Beijing thinks about the corporate debt crisis.
The company will have to make several additional interest payments on the bonds in the coming weeks.
According to the agreement with investors, the company has a grace period of 30 days before a default on its $83.5 million foreign bond payment. Some analysts warn that the failure of large. Highly indebted entrepreneurs could significantly impact China’s economy and potentially spill over into the global financial system.
The real estate economy is an integral part of China’s economy, accounting for nearly 30% of gross domestic product. So any impact on the sector will likely dampen the country’s already slowing growth. And while there are significant risks to China’s real estate industry and the country’s economy.