Ratings agency Fitch says it considers China's Evergrande to be in default, and cuts its creditworthiness even further into 'junk' territory
Evergrande's overseas bonds are officially in default, Fitchsaid on Thursday.
- Fitch cut the property developer's debt further into junk territory after it missed a key interest payment.
- Evergrande warned earlier this week there's "no guarantee" it could make its debt repayments.
AdvertisementFitch Ratings on Thursday cut its rating on embattled Chinese property developer Evergrande and said it considered the company to be in default after two subsidiaries missed a coupon payment due this week.
The developer's long-term foreign-currency issuer default rating was lowered to "restricted default," meaning the issuer has defaulted on a payment, but not filed for bankruptcy or another form of administration. Fitch previously rated Evergrande a "C," the lowest rating prior to default.
Fitch is the first agency to declare Evergrande's overseas bonds are in default, according to the Financial Times.
This reflects Evergrande's failure to pay coupons due November 6 for its
"The non-payment is consistent with an 'RD' rating, signifying the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a material financial obligation," the ratings agency said.
Fitch said Evergrande made no announcement regarding the due payments for two Tianji bonds, and didn't respond to request for confirmation.
"We are therefore assuming they were not paid," it added.
Separately on Thursday, China's central bank governor
"The rights and interests of creditors and shareholders will be fully respected in accordance to their legal seniority," he said.
Evergrande said earlier this week there was "no guarantee" it could meet its debt repayments, prompting government officials to step in with assistance for a restructuring process.
AdvertisementInvestors in the Chinese property market have been keeping an eye on the sector, which remains fragile as the Evergrande situation continues to weigh on the industry. However, with default widely expected for weeks, this had little impact on the company's shares, which closed 4.1% higher in Hong Kong on Thursday. The company's stock has fallen by 90% over the course of 2021, as the extent of its debt problems have come to light.
Disclaimer: This story is originally published by Markets Insider, written by Shalini Nagarajan.
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