China Evergrande reportedly to delay loan interest payment to banks
Financial intelligence provider, REDD, reports on the matter
The report says that Evergrande plans to suspend interest payments due on loans to two banks on 21 September. Adding that the company may also suspend all payments to its wealth management products with effect from 8 September.
This is shaping up to be a major disaster for China's second-largest property developer, with local authorities cracking down hard on the sector. Mind you, Evergrande is also China's most indebted group and it does not look like they have any safety net.
If anything, it sure looks like they are being made an example of given how tight credit conditions are in China right now and a bailout looks less likely by the day.
The fear for China's financial system isn't just defaults stemming from Evergrande itself, it is the fact that Beijing is sending a clear signal of intent through the company's predicament amid the start of a wider crackdown across multiple sectors in the economy.
This is something worth keeping an eye out for as there are potential risks of contagion that may impact market sentiment across the globe.
As the saying goes, when China sneezes, the rest of the world also catches a cold.