Evergrande Real Estate Group or Evergrande Group, a real estate giant with 200,000 employees and 3.8m jobs indirectly dependent on its operations and with debts more than $300 billion, forced Fitch to downgrade the company to the CC investment grade it shows high probability default. Moody’s did the same the day before.
The company is finding it difficult to service these debts and the value of its new homes has fallen by more than 20% in China. In this way, even with big discounts, it finds it difficult to sell its properties.
Evergrande Group employees are protesting outside its offices for unpaid salaries. It has lost 75% of its value since the beginning of the year. Trading in one of its bonds “froze” on the Shenzhen Stock Exchange.
The recent announcements by Chinese President Xi Jinping, which were directed at unsustainable growth and in favor of equitable social development, are questionable as to whether the Evergrande Group will go bankrupt and as it will cause a severe systemic shock to the Chinese economy.
