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Hengda Group, a Chinese real estate developer with growing fears of bankruptcy, announced today (23rd) that it will pay off interest on bonds that are maturing. First of all, the fire seems to be extinguished, but the market is still uneasy as the interest and principal to be paid in the future are much higher.
This is Beijing Correspondent Ji-Sung Kim.
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Hengda Group, China's second-largest real estate developer, announced today that it will pay 42.5 billion won in interest on RMB bonds that mature as scheduled.
Although he did not mention 98.9 billion won in interest on dollar-denominated bonds, foreign media predicted that this could also be repaid.
Earlier, the British daily Financial Times reported that Hengda Group had raised some of its funds by selling retail financial products.
Chinese stocks rose.
The Shanghai Composite Index ended the morning up 0.58% and the Shenzhen Composite Index rose 0.63% from yesterday.
However, as Hengda Group's debt reaches 350 trillion won and it has to repay 790 billion won in interest this year alone, there is still a lot of anxiety.
CNN reported that the Hengda Group could delay the bankruptcy date, but it would not avoid bankruptcy.
Prospects are divided as to the impact of Hengda Group's bankruptcy.
Some experts believe that it could have the same impact as the Lehman Brothers crisis that caused the international financial crisis a decade ago.
[Alex Wong / Head of Asset Management, Ampoule Capital: If the situation spreads and affects the bond and real estate markets as a whole, the problem will grow.
Like the Lehman incident, it could affect other real estate developers as well.]
On the other hand, credit rating agency S&P said, "The Hengda Group's loans are only 0.3% of the total loans of banks in China, and the Chinese financial authorities can manage them." The likelihood of it expanding to .