China Evergrande Group issued an announcement stating that it had failed to fulfill a guarantee obligation amounting to $260 million on Dec.3.

Based on the current liquidity situation Evergrande made it clear that the Group is not sure whether it has restructuring funds to continue to perform its financial responsibilities.

Insiders say Evergrande’s debt crisis is difficult to deal with.

Currently, Evergrande Group has a total debt of approximately 2 trillion yuan—about $314 billion. Although the local government provides partial financial support, it can only hold out for a while.

During the negotiation process between Evergrande and the construction units, related departments and agencies were present. But the two partners have not yet found a viable solution to resolve. Therefore, the stagnation is likely to continue.

Evergrande’s first dollar default will cause widespread concern. CBN News said that default on this $260 million bond means it will stop paying interest and debt due in the future.

Since the beginning of 2021, Evergrande has continuously fallen into a liquidity crisis with creditors. Starting in September, the relevant local governments have tried to resolve the debt crisis. Guangdong Province, where Evergrande Real Estate is registered, assumes primary responsibility for Evergrande’s risk management.

Over the past year, Xu Jiayin, chairman of Evergrande’s board of directors, has sold shares and personal assets, raising nearly 10 billion yuan—about $1.57 billion. Much of this money is used to pay interest owed abroad. And repurchase Evergrande wealth management products, spend on general operations and employee salaries, and more.

On Dec. 3, the Guangdong Provincial Government sent several banks and the securities commission to work with the company to find a possible solution to reassure the market.

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