[Asia Economy Reporter Kim Suhwan] The international credit rating agency Fitch has downgraded the credit rating of Evergrande Group, China's second-largest real estate company facing a liquidity crisis, from 'CC' to 'C'.
On the 29th, Fitch released a report lowering the long-term foreign currency bond ratings of Evergrande and its affiliates to 'C', stating "The downgrade of Evergrande's rating reflects the situation where interest on dollar-denominated bonds has not been paid."
Since June 22, Fitch has downgraded Evergrande Group's rating four times.
Earlier, on the 7th, the international credit rating agency Moody's had downgraded Evergrande's corporate credit rating (CFR) from 'Caa1' to 'Ca'.
'Ca' generally indicates a default situation with a low prospect of recovering principal or interest.
Currently, Evergrande Group's debt amounts to $302 billion (approximately 358 trillion KRW). On the 23rd, Evergrande was supposed to pay interest on dollar bonds (about 99.3 billion KRW) and yuan bonds (about 42.5 billion KRW). However, it is reported that Evergrande only paid interest on yuan bonds and failed to pay interest on dollar bonds.
As of this day, Evergrande has not disclosed the timing for payment of the unpaid dollar bond interest. If interest is not paid within the 30-day grace period starting from the 23rd, Evergrande will face a default.
On this day, Evergrande is also required to pay an additional $45 million (approximately 55.9 billion KRW) in dollar bond interest.
According to Bloomberg's tally, Evergrande Group is expected to have $7.4 billion (approximately 8.8 trillion KRW) in bond maturities due by next year.
The market is closely monitoring the escalating bankruptcy risk of Evergrande and its potential impact on the Chinese economy. If Evergrande, which carries the largest debt burden among global real estate companies (about 358 trillion KRW), actually defaults, it could pose a potential threat to the global financial market.
Earlier that morning, Evergrande announced it would sell a 19.93% stake in China Shengjing Bank held by its subsidiary. If this sale is completed, Evergrande is expected to secure about 1.8 trillion KRW in funds.
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