Chinese real estate giant Evergrande is due to repay its loan in December

Leading Chinese property developer Evergrande must make a $255.2 million loan payment in December today or remain in default.

Photo: Getty Images

Leading Chinese property developer Evergrande must make a $255.2 million loan payment in December today or remain in default.

Troubled by its heavy liabilities and interest payments worth $300 billion, Evergrande intends to restructure all its offshore public bonds and accumulated private debt. In recent months, Chinese regulators have eased restrictions on bond sales by property companies and introduced economic stabilization measures in 2022 through various monitoring tools.

Evergrande Chairman Hui Ka Yan stressed that Evergrande’s flatbed model must be eradicated to quickly resume sales and debt repayment by 2025. Progress has also been seen, with the company set to deliver 39 000 homes by the end of the year.

The recovery will still be difficult, as earlier this year Beijing introduced a “three red lines” policy to ration credit to the property sector to mitigate financial risk in China’s property market. This policy rocked Evergrande as it proved to capitalize on an unsustainable business model.

Expect Evergrande to miss today’s payment, continuing the default and increasing risk in China’s real estate sector. Similarly, property income represents a third of the Chinese economy and the crisis could lead to a recession.

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