'All will be lost' Financial crash fears as $24bn now at risk after Evergrande statement

The company, which is one of the largest in the world, delivered a statement to the Hang Seng stock index, informing the organisation liquidity issues may impact its ability to repay investors. Following this, Dr Marco Metzler, senior analyst for Deutsche Markt Screening Agentur (DMSA), said $23.7billion in international bonds is now at risk. Dr Metzler, who has also invested in Evergrande, had previously told, the property giant had missed five deadlines for bond interest repayments.

The five repayments total £110million and Dr Metzler warned the collapse of Evergrande could send shockwaves throughout the global financial system.

Commenting on Evergrande’s statement to the stock index, Dr Metzler said: “We are vindicated by this official statement.

“We have still not received the interest on our bonds, although it has been widely reported in the press that interest payments have been made on bonds where interest payments were past due in October and November 2021.

“This declaration represents an event of default for all 23 outstanding international bonds valued at $23.7billion.

“Almost all will be lost and also has huge implications for the CDS markets and Evergrande bonds used as a collective, as mentioned in my last two posts.”

Last Friday, Evergrande released a statement to the index saying: “In light of the current liquidity status of the Group, there is no guarantee that the Group will have sufficient funds to continue to perform its financial obligations.”

Due to the statement, the government of China’s Guangdong province have summoned Evergrande chair, Hui Ka Yan.

It is estimated the company’s debt totals £221billion.

JUST IN: Global financial crisis fears as Evergrande miss repayment

Last month Evergrande sold its entire stake in Chinese streaming company HangTen for $273million (£200million) in order to increase liquidity to help pay off debts.

The company faces its next deadline on December 28, where it will face an interest payment of $255million (£192million).

It then faces two further repayments on January 22 and 24, totalling $352.5million (£245million).

If the company were to collapse, there are concerns over the consequences it may have on the property market and therefore, China’s economy.

Mattie Bekink from the economic intelligence unit previously told the BBC: “What happens from here is consequential not only to the Chinese economy, where there are concerns about liquidity pressures and stress in the property and interbank markets but for the global economy.”

The collapse of such a large company could spark a credit crunch where companies struggle to borrow money due to banks having low confidence in the financial system.

The banking system almost collapsed after many citizens in the US could not afford to repay their mortgages thus causing a credit crunch.


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