The main unit of major Chinese property developer Evergrande Group said Wednesday that it will make a coupon payment on bonds due Thursday amid mounting fears that the firm would soon go into default.
Financial market participants had become worried that a possible bankruptcy of Evergrande, whose liabilities have swelled to around 2 trillion yuan ($309 billion), could cause another global financial crisis like the one of 2008.
But it remained unclear whether the Chinese company, which owns a popular soccer club in the country, can completely avoid default risk, given that it must continue to make interest payments on other bonds past Thursday, sources close to the matter said.
With concern growing over a potential resurgence of the 2008 global financial crisis triggered by the collapse of U.S. securities firm Lehman Brothers Holdings Inc., a large number of investors have recently been eager to reduce their stock holdings worldwide.
The main unit of Evergrande said it needs to pay a 232 million yuan coupon on bonds due Thursday.
The property developer has been keen to expand its business while the real estate market in China has been shrinking against the backdrop of the nation's prolonged trade dispute with the United States and the novel coronavirus outbreak.
Evergrande has also dabbled in many businesses, including electric vehicle development, which has inflated its debt. The company has considered selling off its EV business, but such a deal has yet to materialize.
Evergrande, meanwhile, has been impacted by recent government policy aimed at preventing real estate prices from rising sharply. The firm has acknowledged that its property business has become sluggish since early September.
Evergrande was established in the southern province of Guangdong in 1996 by billionaire Xu Jiayin, and it is now headquartered in Shenzhen, a special economic zone in the province.
Sales of the company, listed on the Hong Kong Stock Exchange since 2009, reached 507.2 billion yuan in 2020. It is 122nd among 500 global enterprises ranked by the U.S. business magazine Fortune.