Australia is increasingly worried about the collapse of Chinese property giant Evergrande with key government experts predicting it won’t be able to repay crucial debts due next year.
China’s second biggest apartment builder owes creditors more than $400billion and last week missed another key annual interest payment deadline to bondholders.
The failure to honour a November 6 due date has triggered another 30-day grace period, with Evergrande previously missing three other deadlines in September and October.
Fears about the Chinese property market are already affecting Australia’s biggest export, iron ore, with the spot price now below $US90 a tonne for the first time since May 2020 during the early months of the Covid pandemic.
The commodity used to make steel was worth more than $US200 as recently as July.
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Australia is increasingly worried about the collapse of Chinese property giant Evergrande with key government experts predicting it won’t be able to repay its debt (pictured are buildings under construction at the Evergrande Cultural Tourism City at Taicang)
Evergrande’s woes are also occurring as China makes record cuts to steel production to meet climate change targets.
The Reserve Bank of Australia noted that Evergrande’s debts of $420billion comprised two per cent of China’s gross domestic product.
Its statement on monetary policy for November also analysed how fixed-interest markets were now expecting Evergrande to default on both its US dollar and Chinese renminbi-denominated bonds with more interest payment deadlines due in 2022.
‘US dollar bond prices suggest that creditors expect to be able to recover only 25 cents on the dollar,’ the RBA note said.
READ MORE VIA THE DAILY MAIL