Evergrande misses bond deadline as Beijing tries to protect property buyers – The Telegraph

However, there are fears that a failure to contain the crisis risks derailing China’s economy and causing long-term damage to its property market.

Analysts at Nordea said they expected Evergrande to be quasi-nationalised by the Beijing regime, avoiding an international fallout.

They said: “The Chinese Communist Party will try to contain the domestic risks by ‘bailing out’ local lenders and contractors by slowly but surely transferring Evergrande’s assets to a quasi-public entity over the coming years.”

However, Citibank analysts warned of substantial repercussions for the country’s property market even if Evergrande survives in some form.

They said: “It seems clear that even in an orderly restructuring, the property sector in China is likely to face downside pressures.

“While authorities try to limit lower real estate prices due to fire sales by Evergrande by implementing price floors, price controls typically do not work.”

Meanwhile, the Financial Times reported that Credit Suisse had dumped all of its exposure to Evergrande following concerns over the company’s circular financing. The bank had previously been one of the business’s largest lenders, but stopped writing debt or arranging bonds in 2019.

European banks have been seeking to calm investors’ nerves.UBS, HSBC and Deutsche Bank have all emphasised their limited exposure in the last few days.

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