09-22-2021, 04:59 PM
- Worries about highly indebted property developer China Evergrande’s ability to pay interest on its U.S. dollar-denominated bonds has prompted comparisons to the collapse of Lehman Brothers in 2008 and the subsequent financial crisis.
- When it comes to the actual scale of impact, analysts point out that Evergrande holds land, while Lehman held financial assets.
- International Monetary Fund Chief Economist Gita Gopinath told Reuters this week the organization believes “China has the tools and the policy space to prevent this turning into a systemic crisis.”
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BEIJING — Property developer China Evergrande’s debt woes are not likely to cause the same fallout as the collapse of U.S. investment bank Lehman Brothers in 2008, analysts said.
Evergrande’s Hong Kong-listed shares have tumbled nearly 90% since July 2020, as the Chinese government cracked down on speculation in the real estate market.
The stock has lost more than 20% in the last five trading days and investors are watching to see if the highly indebted real estate giant will be able to make millions of dollars in interest payments on U.S. dollar-denominated bonds in the coming days. The jitters have contributed to global stock market declines this week.
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