Struggling Evergrande faces $A60 million deadline on Friday as contagion fears grow

The ailing property behemoth is facing another major blow, with tens of millions of dollars due this week as contagion fears escalate.

Evergrande is facing another crucial deadline, with the world’s most indebted real estate company facing a $A60 million deadline within hours.

The struggling property developer is due to pay a $US45.17 million ($A59.8 million) bond coupon – which was originally due on September 29 – by Friday, when a 30-day grace period finally expires.

Insiders will be watching this space keenly, as the firm frantically tries to raise money, avoid default and keep afloat, after racking up a staggering $A432 billion in debt.

Last week, the firm managed to avoid defaulting on a bigger interest payment after wiring through the cash just days before that Saturday deadline, but a new missed payment could end up sparking cross defaults on some Evergrande notes.

A housing complex of Chinese property developer Evergrande is seen in Kunming, in southwestern Yunnan province on October 23, 2021. Picture: Jade Gao/AFP

The situation is so dire that Beijing has stepped in to request Evergrande make payments on offshore bonds, and even push billionaire founder Hui Ka Yan to use his personal fortune to fix the growing problem.

And it’s not just the Friday deadline that’s cause for concern, with Evergrande already overdue on two other notes, with another four due by the end of 2021, and a $2 billion dollar bond due in March next year.

In fact, the crisis is so severe insiders now expect it to lead to a massive debt restructuring which could end up being on of the biggest ever seen in China.

Given the sheer scale of the company, many finance experts fear its collapse could end up being China’s “Lehman moment”, given the real estate is worth up to a quarter of China’s overall economy.

There are also serious concerns the Evergrande fiasco could trigger a contagion event across other companies and sectors, which many believe it already happening.

Evergrande has been teetering on the brink of collapse for months, Bertha Wang/AFP

Contagion spreads

Earlier this month, fellow Chinese property developer Fantasia missed a payment on a $US206 million ($A282 million) bond that had matured the day before, triggering a default.

It came as property management firm Country Garden Services Holdings said that a unit of Fantasia had missed repayment on a 700 million yuan ($A108 million) loan, saying it was likely the company would default.

And in another blow to China’s struggling real estate sector, another firm, Sinic Holdings, also defaulted on a debt interest repayment this month, with Fitch ratings downgrading Sinic as a result.

A man walking past a housing complex by Chinese property developer Evergrande in Guangzhou, China's southern Guangdong province. Picture: AFP

Now, it seems yet another company is in trouble, with shares in Kaisa Group Holdings Ltd plummeting by a whopping 18 per cent in Hong Kong this week after announcing it may not be able to refinance dollar debt.

The company was then downgraded two notches by both S & P Global Ratings and Fitch to CCC+ from B on Wednesday, Bloomberg reports.

“We view the company’s capital structure as unsustainable amid challenging operating conditions and a tight funding environment,” S & P analysts including Aeon Liang wrote in a report this week in light of the concerning news.

Originally published as Struggling Evergrande faces $A60 million deadline on Friday as contagion fears grow