Bankinter| China’s largest developer, Country Garden, may have defaulted on two bonds over the weekend. Its size is four times that of Evergrande. On the other hand, Chinese asset manager Zhongrong International may not have repaid capital and coupons on some of its real estate vehicles.
Assessment: Bad news, which once again puts the Chinese real estate sector in check and is a consequence of the government’s scant measures to support the real estate market. As was seen in the case of Evergrande, a large part of the debt is in the hands of Chinese creditors and in the event of default the government would probably intervene. It should therefore have little direct impact outside its borders. However, the collapse of the real estate sector once again casts doubt on the evolution of the Chinese economy and, therefore, global economic growth.
