BEIJING — Highly indebted property developer China Evergrande will possible default as a result of the corporate has basically misplaced its important enterprise, S&P World Scores analysts stated in a report Thursday.
Evergrande was China’s second-largest developer by gross sales final yr. Like many Chinese language builders, the corporate bought residences to customers earlier than completion, serving to to generate capital for future tasks.
However that money circulation cycle is operating into issues. Regardless of the corporate’s potential to promote belongings and discover methods to make funds in time, “Evergrande’s massive debt will catch up with it,” the S&P report stated.
“The firm has lost the capacity to sell new homes, which means its main business model is effectively defunct. This makes full repayment of its debts unlikely,” the analysts stated.
“We still believe an Evergrande default is highly likely,” the report stated.
Evergrande didn’t instantly reply to a CNBC request for touch upon the S&P report.
Whereas the developer has managed to stave off default with last-minute funds, the analysts stated Evergrande’s greater check can be when $3.5 billion comes due for U.S. dollar-denominated notes in March and April subsequent yr.