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Evergrande: DMSA creditor prepares bankruptcy petition

2021-11-10T13:26:34.170Z

Once again, real estate giant Evergrande failed to pay interest on bonds. More than 20 other offshore bonds are therefore considered to have defaulted, says Marco Metzler. The credit analyst prepares a bankruptcy petition against Evergrande for the creditor DMSA.



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Fear of the quake:

The Chinese real estate company has again skipped interest payments

Photo: ROMAN PILIPEY / EPA

The $ 300 billion indebted Chinese real estate giant Evergrande apparently failed to make interest payments of around $ 148 million on Wednesday again. "Evergrande failed to make interest payments to international investors again today," said DMSA Senior Analyst Dr.

Marco Metzler

(49) on request from manger magazin.

According to Metzler, the German Market Screening Agency (DMSA) is itself invested in Evergrande bonds and will now file for insolvency against the company as a creditor.

"That can take a few days, we are preparing it and are in contact with several law firms operating around the world," said Metzler and confirmed: "With the banks in Hong Kong closing today, it is certain that these bonds have defaulted."

"With the banks in Hong Kong closing today, it is certain that these bonds have defaulted"

Credit analyst Dr.

Marco Metzler

The second largest real estate developer in China was already in arrears with interest payments on two bonds in September, for which the 30-day grace period ended in October. Neither Evergrande nor its creditors had officially confirmed reports of alleged payments shortly before the end of the grace period. "We asked numerous investors we knew, they couldn't confirm any incoming payments," Metzler said in an interview with manager magazin a few days ago. Evergrande declined to comment again on Wednesday.

According to the credit analyst, all 23 other outstanding bonds are now deemed to have defaulted according to the cross-default principle. So it is regulated in the loan terms. Cheated investors could now file for bankruptcy, said the former Fitch ratings analyst. To establish bankruptcy, a bankruptcy petition must be filed with the court. Either the company itself or one or more of the company's creditors can do this. Metzler called on other investors to join the DMSA. As soon as a court opens bankruptcy proceedings, "Evergrande will officially be bankrupt". This is then only a matter of days.

According to Metzler, international investors alone have invested around 23.7 billion US dollars in 23 bonds and three large loans.

Fitch analysts expect Evergrande to be liquidated in the event of bankruptcy.

Much more than 5 percent of their claims are unlikely to be paid out to the creditors.

US Federal Reserve worries about chain reaction, Fantasia no longer wants to guarantee

Evergrande is not an isolated case, but is representative of the whole, hard-hit real estate industry in China.

Shares in developer Fantasia Holdings plunged 50 percent on Wednesday after the company said it could not guarantee it will meet its financial obligations after failing to make an October 4 million payment of approximately $ 206 million.

The Chinese real estate sector represents up to 30 percent of China's economic output.

A wave of bankruptcies in real estate companies could drag thousands of other companies into the abyss and also place a heavy burden on banks, experts have long expressed concern.

The major international bank HSBC based in London, for example, has loans amounting to 19.6 billion US dollars for the third quarter, which it has granted exclusively to Chinese real estate groups.

In total, the major bank accounted for $ 196 billion in loans to Chinese companies from all kinds of industries.

The US Federal Reserve warned on Tuesday that the ailing Chinese real estate sector could even pose a global risk.

rei

Source: spiegel

All news articles on 2021-11-10

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