Evergrande downgraded by Fitch over missed payments
Updated : 11:41
Fitch Ratings has downgraded China Evergrande Group after the agency said the embattled property developer had defaulted on its dollar debt.
Fitch said its new rating of "restricted default" reflected the non-payment of coupons due 6 November for Tianji’s $645m 13% bonds and $590m 13.75% bonds, after the grace period lapsed on Monday. Tianji is a subsidiary of Evergrande.
It noted: "There has been no announcement from the company or the trustee regarding the coupon payments for the two Tianji bonds after the grace periods lapsed.
"In addition, the company did not respond to our request for confirmation of the coupon payments. We are therefore assuming they were not paid.
"Failure to make coupon payments within the grace period is consistent with Fitch’s definition of an RD rating." The rating is applied when a company defaults on debt but has yet to enter administration or bankruptcy proceedings.
Fitch is the first ratings agency to declare Evergrande in default. If the company has - as suspected by Fitch - missed the coupon payments, it would mark the first time it has defaulted on its dollar debt.
Fears over a potential default have unsettled global markets throughout the autumn.
Shares in the Hong Kong-listed firm slumped to a fresh low at the start of the week after it confirmed late on Friday it had received a $260m guarantee obligation, and there was no guarantee it would have sufficient funds to meet it. They then fell further after trading in smaller rival Kaisa Group Holdings was suspended on Wednesday.
The spiralling crisis in China’s once red-hot property sector has been largely prompted by Beijing, as it looks to crack down on soaring levels of debt and rampant consumer speculation. Evergrande, which borrowed heavily to build its property portfolio has debts of around $300bn, owns around 1,300 projects in more than 280 Chinese cities.
Evergrande has so far made no comment on the downgrade, nor has it confirmed or denied the assumed default.
Shares in Evergrande closed 4% higher on Thursday, at HK$1.80.