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Evergrande going the way of the bogong moth and ‘be gone’

  • The Chinese property developer has amassed $A420 billion in debt.
  • Defaulting on bond repayments has seen Fitch downgrade the company.
  • Evergrande is tracking the way of the now endangered Australian bogong moth.

Evergrande Group is heading in the direction of the Australian bogong moth and is officially an endangered species after officially being labelled a defaulter for the first time.

The world’s most indebted real estate company, which has amassed a whopping $A420 billion in debt, has now failed to pay bond repayments and has been declared in default by Fitch Ratings.

In a statement, Fitch said the downgrades reflect the non-payment of coupons due November 6 2021 for Evergrande and its subsidiaries of US$645 million 13% bonds and US$590 million 13.75% bonds after the grace period lapsed on December 6.

It looks as though Evergrande could go the way of the Australian bogong moth, which has now been listed as endangered on the global red list of threatened species, compiled by the International Union for the Conservation of Nature.

As reports suggest that the addition of the bogong moth should be a wake-up call about declines in Australia’s invertebrates, Evergrande’s default should be a tocsin for global markets.

If Evergrande is liquidated in a bankruptcy (as it is an asset-trading company), there are fears it could trigger a bloodbath in global markets and send world economies into a meltdown.

Yet the global ramifications of the potential collapse of Evergrande is an unknown.

When Lehman Brothers imploded in September 2008 few could have predicted it would trigger what would become the global financial crisis (GFC).

While there’s major concerns that Evergrande could severely damage the property sector, only time will tell if it will become China’s Lehman Brothers.

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