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Evergrande rating cut by Fitch on likely missed payment

To C from CC, one notch above the equivalent default level.
Image: Qilai Shen/Bloomberg

China Evergrande Group’s credit rating has been cut by Fitch Ratings to C from CC, one notch above the equivalent default level.

“The downgrades reflect that Evergrande is likely to have missed interest payment on senior unsecured notes” and entered a 30-day grace period, Fitch analysts wrote in a Wednesday report.

The borrower was due to pay a $83.5 million dollar bond coupon September 23, Bloomberg-compiled data show. Evergrande hasn’t issued any public statements about the interest payment, and at least several bondholders said they hadn’t received it.

Investors are scrutinizing the developer’s every move as they try to gauge whether the property giant’s cash crunch will lead to financial and economic contagion. It also needs to pay a $45.2 million coupon due Wednesday on another dollar bond as its debt obligations mount.

Separately, some holders of a bond issued by a company called Jumbo Fortune Enterprises are forming a committee to press their claims in the event of a default because they maintain Evergrande is a guarantor of the debt, Bloomberg reported Tuesday. The note matures Sunday and could be the first major maturity test for the firm since regulators urged it to communicate with bondholders and avoid near-term default on its dollar bonds.

© 2021 Bloomberg

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