Evergrande’s Ratings Withdrawn by Fitch Ratings Under Domestic and International Debt Crisis

It was reported on June 4, A $151 million stake in Danyang Evergrande Properties Limited held by Evergrande Group was frozen. On the same day, Fitch cancelled the credit ratings of Evergrande Group and its two subsidiaries.

Fitch Ratings said in a June 2 statement that China Evergrande Group could not provide sufficient information for the ratings and that ultimately, the group and its two subsidiaries opted to no longer participate in the rating process, so Fitch could only cancel its credit rating and no longer provide analytical reports for it.

In December last year, due to default on offshore bond obligations, the rating agency has downgraded the rating of Evergrande and its subsidiary Hengda Real Estate Group Co Ltd and Tianji Holdings Ltd to a Restricted default. In addition, another credit rating agency, Moody’s Investors Service downgraded Evergrande’s Corporate Family Rating (CFR ) from “Caa1” to “Ca”, with a negative perspective as early as 2021, citing the fact that Evergrande was facing significant debt maturity, increased liquidity and risk of default.

In addition, according to the investigation results of “Qi Cha Cha”, the official enterprise credit agency of the Chinese Communist Party, Evergrande Group is involved in 3,339 judicial cases, with 85 records of executors, the total amount executed exceeds 14.3 billion yuan, 9 records of restricted high consumption, two records of final cases, and the total amount unfulfilled is 876,100 yuan. Evergrande is considering repaying approximately US$19 billion of debt to offshore public bondholders with cash instalments and equity in two units of its Hong Kong-listed Evergrande Property and Evergrande Auto.

After failing to meet its repayment obligations at the end of last year, Evergrande’s $22.7 billion offshore debt was considered default. In March 2022, Chen Yong, a member of the Evergrande Risk Resolution Committee, said that Evergrande will propose a restructuring plan by the end of July 2022.