Report: Struggling Chinese Developer Pays Security Deposit
BEIJING (AP) – A struggling Chinese developer whose struggle to avoid a multibillion-dollar default rocked global financial markets wired $ 83.5 million on Friday to make a late payment to bondholders foreigners, a government newspaper reported.
The Evergrande group’s struggle to reduce its 2,000 billion yuan ($ 310 billion) debt to comply with stricter official borrowing restrictions has raised fears that a default could trigger a financial crisis. Chinese officials have tried to ally investor fears by saying debt problems can be brought under control and should not impact the financial sector.
Evergrande wired money Friday into a Citigroup account for a bond payment due on September 23, the Securities Times reported, citing unidentified sources.
Evergrande missed payments in late September and early October to investors in US dollar-denominated bonds issued abroad. The company said on Wednesday that a 30-day grace period for making those payments before he was declared in default had not yet expired.
The ruling Communist Party is urging companies to reduce debt levels it considers dangerously high.
Economists say Beijing can prevent a credit crunch if Evergrande defaults on debts to Chinese banks and bonds, but wants to avoid appearing to be holding a bailout as it tries to force other companies to reduce their dependence on debt.
The construction slowdown helped depress China’s economic growth to a surprisingly low 4.9% from a year earlier in the three months ending in September. Forecasters expect growth to slow further if the funding brakes remain in place.