Business Standard

China’s realty giant cannot pay interest


One of China's biggest real estate developers is struggling to avoid defaulting on billions of dollars of debt, prompting concern about a broader economic fallout and protests by buyers of unfinished apartments.

Evergrande Group appears likely to be unable to repay all of the 572 billion yuan ($89 billion) it owes banks and other bondholder­s, financial rating agencies say. That might jolt financial markets, but analysts say Beijing is likely to step in to prevent wider damage if Evergrande can't manage an orderly resolution of its debts.

Defaults have gradually been allowed to increase in hopes of forcing borrowers and investors to be more discipline­d. Despite that, total corporate, government and household debt rose from the equivalent of 270 per cent of annual economic output in 2018 to nearly 300 per cent last year, unusually high for a middle-income country.

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