China Evergrande Group continues to lose credibility in the debt market as Fitch Ratings revoked its rating on the giant Chinese property developer.
In a statement on June 2, Fitch Ratings announced that it withdrew its long-term foreign-currency issuer default ratings on China Evergrande Group and its two subsidiaries, Hengda Real Estate Group and Tianji Holding Limited.
Fitch explained that it withdrew the ratings as Evergrande and its subsidiaries have chosen to stop participating in the rating process. Therefore, it has no longer sufficient information to maintain the ratings.
Accordingly, the rating agency no longer provides credit ratings or analytical coverage for Evergrande and its subsidiaries.
Evergrande was once a top-three Chinese property developer by contracted sales with a strong presence across China. But, in 2021, the group lurched from one missed payment deadline to another and failed to meet its repayment obligations at the end of last year. Its debt woes quickly led to a wave of defaults in China’s real estate sector.
Evergrande is now reeling under more than 300 billion dollars in liabilities.
Before abandoning the ratings for Evergrande, Hengda and Tianji, Fitch downgraded these heavily indebted companies to “Restricted Default” on December 9, 2021.
By the end of last year, all the world’s largest credit rating companies, including Fitch, Moody’s, and Standard & Poor’s, had found Evergrande in default.
China Evergrande Group has not solved its crisis, although the debt-laden developer reportedly proposed a plan to restructure debt.
On May 27, Reuters cited sources saying that Evergrande is mulling repaying about 19 billion dollars to offshore public bondholders. They would pay in cash installments and stakes in two of its Hong Kong-listed units.
A source said that Evergrande proposed to repay offshore creditors by turning the principal and interest into new bonds, to be repaid in installments over 7 to 10 years.
The group will also allow offshore creditors to swap up to 20% of their debt into shares in its two Hong Kong-listed units, Evergrande Property Services Group and China Evergrande New Energy Vehicle Group.
The sources said that Evergrande chairman Hui Ka-yan expects bondholders to accept the proposal because there are not many assets offshore that can be sold immediately to pay off the debts.