BlackRock and four other large institutions forced to write-off billions after Fitch Ratings downgrades China Evergrande to “restricted default” status.

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After Fitch Ratings downgraded China Evergrande and some of its subsidiaries to “Restricted Default” status on Thursday, there was for the first time, widespread acknowledgement of the Chinese property giant’s failure to meet its debt obligations.

“The downgrades reflect the non-payment of coupons due 6 November 2021 for Tianji’s USD645 million 13% bonds and USD590 million 13.75% bonds after the grace period lapsed on 6 December. The non-payment is consistent with an ‘RD’ rating, signifying the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a material financial obligation,” Fitch wrote.

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This acknowledgement was a long time coming.

For months investors had been forced to rely on the validity of anonymous sources who claimed, via respected publications, that Evergrande had been making good on bond coupon payments at the very last minute – and staving off default.

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“Fitch’s calculation of CNY1.6 trillion in adjusted inventory at end-2020 includes property development inventory, investment property at cost, hotel properties and joint-venture investments. Customer deposits, amounts due to non-controlling interests and amounts due to joint ventures and associates are deducted from the summation of items mentioned previously. Guarantees to third parties are calculated as debt.”


h/t  Fatherthinger


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