Evergrande bankruptcy + Dispute over Lithuania + Flat-lying tigers

Rating agencies consider Evergrande bankrupt

Perhaps that one, clearly defined “Evergrande moment” won’t happen after all. Instead, a “salami-slicing bankruptcy” is playing out before our eyes. Every week, the struggling real estate company misses one payment deadline but occasionally serves another – albeit usually late. In China, there are no punishments for delaying bankruptcy (China.Table reported). This gives Evergrande more opportunities to play for time than any German company would have.

On Thursday, however, the noose tightened considerably. The clearest statement came from rating agency Fitch. It downgraded Evergrande’s credit rating to RD (Restricted Default): basically bankrupt, although still partially capable of maintaining business operations. Just below that, however, comes a total default on the credit rating scale. The reason for the downgrade: Evergrande failed to settle $82.5 million in overdue interests on Monday (China.Table reported). Rating agency Standard & Poor’s is also not holding back with its prognosis either, announcing that defaults are “inevitable.” Such signals from both two major rating agencies mean nothing other than the beginning of the end for the Evergrande Group in its current form.

The Shenzhen-based real estate group, which has already just missed bankruptcy several times, has thus missed another reprieve. The Hong Kong stock exchange accordingly reacted alarmed: The shares of the real estate giant fell again on Wednesday. On Thursday, the price was hovering around the 20 euro cent mark. A year ago it was still at three euros. Meanwhile, the government has started suppressing Internet rumors about the imminent bankruptcy to avoid unrest.