Saudang
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The firm’s debts are huge, but Beijing will need to walk a fine line if it wants to send a message about reckless borrowing while protecting its economy.
Every once in a while, a company grows so big and messy that governments fear what would happen to the broader economy if it were to fail. In China, Evergrande, a sprawling real estate developer, is that company.
Evergrande has the distinction of being the world’s most debt-saddled developer and has been on life support for months. Now, it looks to be facing the biggest corporate restructuring in Asia.
Fitch Ratings, a credit ratings firm, has said the Chinese developer is in default of its obligations. Evergrande has said that officials from several state-backed institutions had joined a risk committee that would help the company restructure itself.
Evergrande is a huge real estate empire with millions of apartments in hundreds of cities across China. It also has more than $300 billion in financial obligations, hundreds of unfinished residential buildings and angry suppliers who have shut down construction sites. Things got so bad that the company paid its overdue bills with unfinished properties and asked employees to lend it money.
What happens next could reverberate through China’s economy, affecting home buyers, more than 3.8 million jobs, and hundreds of thousands of employees who work for the company.
Observers are now watching to see how Beijing handles the next chapter of Evergrande for what it says about the country’s intentions to clean up the country’s corporate sector by letting “debt bombs” like Evergrande collapse.
www.nytimes.com
Every once in a while, a company grows so big and messy that governments fear what would happen to the broader economy if it were to fail. In China, Evergrande, a sprawling real estate developer, is that company.
Evergrande has the distinction of being the world’s most debt-saddled developer and has been on life support for months. Now, it looks to be facing the biggest corporate restructuring in Asia.
Fitch Ratings, a credit ratings firm, has said the Chinese developer is in default of its obligations. Evergrande has said that officials from several state-backed institutions had joined a risk committee that would help the company restructure itself.
Evergrande is a huge real estate empire with millions of apartments in hundreds of cities across China. It also has more than $300 billion in financial obligations, hundreds of unfinished residential buildings and angry suppliers who have shut down construction sites. Things got so bad that the company paid its overdue bills with unfinished properties and asked employees to lend it money.
What happens next could reverberate through China’s economy, affecting home buyers, more than 3.8 million jobs, and hundreds of thousands of employees who work for the company.
Observers are now watching to see how Beijing handles the next chapter of Evergrande for what it says about the country’s intentions to clean up the country’s corporate sector by letting “debt bombs” like Evergrande collapse.
What to Know About China Evergrande, the Troubled Property Giant
The firm’s debts are huge, but Beijing will need to walk a fine line if it wants to send a message about reckless borrowing while protecting its economy.
