Fitch Downgrades Evergrande Group, Units to ‘Restricted Default’

Fitch Ratings announced on Thursday that it downgraded China Evergrande Group and its subsidiaries to “restricted default” after the heavily indebted developer had missed an important interest payment this week.

Evergrande, whose debts exceed $300 billion, missed a deadline on Monday to repay bond coupons from an overseas company totaling $82.5 million. The coupons were due on Nov. 6 and its grace period ended 30 days after.

Fitch was the first rating agency to declare that Evergrande’s bonds are in default. The agency said in a statement that the lender has not responded to their requests to confirm Evergrande’s payment, therefore assuming that it has not been made.

The company is also yet to confirm the status of the bond, although it said in a filing last week that there was “no guarantee” that it could meet its financial obligations as it announced that it will enter a debt restructuring phase.

Fitch said that the non-payment falls under its “RD” (Restricted Default) rating which signifies “the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a material financial obligation.”

The developer’s chair Hui Ka Yan has been resisting pressure to raise cash with an asset fire sale, the Financial Times reported, according to people familiar with the matter.

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