Pitch Downgrades China Evergrande Group to 'Limited Default' Rating

[Image source=AP Yonhap News]

[Asia Economy Reporter Yoo Je-hoon] Global credit rating agency Fitch has downgraded the credit rating of Chinese real estate company Hengda (恒大) to a 'Restricted Default' rating.

According to Bloomberg News on the 9th, Fitch Ratings downgraded the long-term foreign currency issuer default ratings (IDR) of Hengda Group and its affiliates Hengda Real Estate Group and Tenji Holdings from the previous C to RD (Restricted Default).

This action follows Hengda Group's failure to pay interest on two types of bonds whose grace periods expired in June. Fitch inquired with Hengda Group about any payment commitments but received no response, thus considering that no commitment was made.

Hengda Group has effectively been in a 'default' state since it failed to pay bond interest due on the 6th. Facing debt repayments amounting to $19.2 billion, the downgrade by Fitch marks the first credit rating cut, increasing the likelihood of a chain default.

Meanwhile, Fitch also assigned a Restricted Default rating to Chinese real estate company Kaisa Group on the same day.

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