Regulators have warned of broader risks to the country’s financial system if the company’s US$305 billion of liabilities are not contained. “We believe a default would reinforce credit polarization among homebuilders and could result in headwinds for some smaller banks,” Fitch said. The rating agency on Tuesday last week downgraded Evergrande to “CC” from “CCC+,” indicating that it viewed a default of some kind as probable. “Smaller banks with higher exposure to Evergrande or to other vulnerable developers could face significant increases in non-performing loans (NPLs), depending on how any credit event involving Evergrande develops,” Fitch said. This followed chaotic scenes at the headquarters two days earlier, as disgruntled investors crowded its lobby to demand repayment of loans and financial products.

Source: Taipei Times September 15, 2021 15:56 UTC