The second-largest property developer in China – The Evergrande Group, is under fire as the company is struggling to pay its debt. Fitch, one of the world’s biggest credit rating agencies, announced the Evergrande group at default. The company wouldn’t be able to publish its financial report by the end of March 31.
Last year, a new rule related to property was announced in Beijing. The rule controls the amount held by the big real estate groups. Evergrande ended up selling real estate at heavily discounted prices to keep the business afloat. As a result, now the company is struggling to meet its interest and debt. The company borrowed $300 billion to expand the business.
The Evergrande group is dealing with financial and social pressure as they have to deliver the pre-sold housing projects and salaries of workers and employers. Now Chinese authorities would have to interfere to resolve the matter, including the sales of the founder’s personal assets to repay the debt.
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