China came THIS close to another massive property developer default
Evergrande Real Estate Group, one of the country's largest developers, will receive more than $16 billion in credit lines from Chinese banks, the New York Times reported Tuesday.
As prices fall and housing units remain empty, real estate developers are having trouble paying back debt. Evergrande, while one of China's biggest developers, has also racked up one of the highest levels of debt, much of it from foreign investors.
But according to analysts cited in the article, the billion-dollar lifeline is only a short-term solution as China's housing market continues its downward spiral.
According to the New York Times, Evergrande's debt reached about $24 billion by the end of June, plus another $7 billion in perpetual bonds marked as equity. Company sales last year reached about $20 billion.
Earlier this year, another prominent developer Kaisa Group Holdings defaulted with more than $10 billion in debt and had $2 billion in assets frozen.
The $16.2 billion in credit will come from Bank of China, Agricultural Bank of China, Postal Savings Bank of China, and China Minsheng Bank.
Read the full story at the New York Times >>