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China preparing for Evergrande's downfall - WSJ

China preparing for Evergrande's downfall - WSJ
China preparing for Evergrande's downfall - WSJ   -   Copyright  Thomson Reuters 2021   -  
By Reuters

<div> <p> – Chinese authorities are asking local governments to prepare for the potential downfall of debt-ridden China Evergrande Group, the Wall Street Journal reported on Thursday, citing officials familiar with the discussions.</p> <p>The move has been characterised as “getting ready for the possible storm” by the officials, according to the report.</p> <p>The officials said local-level government agencies and state-owned enterprises have been instructed to step in only at the last minute should Evergrande fail to manage its affairs in an orderly fashion, the <span class="caps">WSJ</span> reported.</p> <p>Local governments have been tasked with preventing unrest and mitigating the ripple effect on home buyers and the broader economy, the officials said, according to the report.</p> <p>Evergrande, China’s second-biggest property developer, has $83.5 million in dollar-bond interest payments due on Thursday on a $2 billion offshore bond and a $47.5 million dollar-bond interest payment due next week.</p> <p>Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.</p> <p>The company, which epitomised the borrow-to-build business model, ran into trouble over the past few months as Beijing tightened rules in its property sector to rein back debt levels and speculation.</p> <p>Investors are worried that a downfall could spread to creditors including banks in China and abroad.</p> <p/> </div>