S&P Global Ratings have become the second credit-risk assessor to declare struggling property developer China Evergrande Group in default, reports Caixin. The ratings firm labeled Evergrande as in “selective default” based on its failure to make coupon payments by the end of a grace period at the start of this month, a move that may prompt cross-defaults on Evergrande’s $19.2 billion in dollar debt. S&P Global also withdrew its ratings on the group at Evergrande’s request.
Fitch Ratings was the first to declare the property developer in default December 9. Long considered by many investors as too big to fail, Evergrande has become the largest casualty of Chinese leader Xi Jinping’s campaign to tame the country’s heavily-indebted corporations and overheated property market. Concern has since spread to higher-rated firms like Shimao Group Holdings as liquidity stress intensifies.
Earlier this month, China’s central bank governor said the Evergrande situation had to be dealt with by the market, signaling that Beijing wouldn’t bail out the world’s most-indebted developer as it struggles with more than $300 billion in liabilities.
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