Fitch has downgraded Evergrand’s rating due to pressure to reduce and reduce debt

Shares of Evergrand plunged 4 percent after Fitch downgraded the Chinese developer’s credit rating in one day, adding to concerns about the financial health of one of the country’s largest corporate lenders in international markets.

The U.S. rating agency said on Tuesday it would lower the Bra from the B plus for long-term foreign currency ratings, the first in more than five years for the company, “to pressure Evergrand to continually reduce its business and reduce its total debt.” .

The indebted company, which in the turn of the decade became a vast conglomerate urbanization in China, under pressure from Beijing’s top real estate developers to reduce leverage as part of government attempts in the real estate sector.

Unrest about some high-profile Chinese borrowers has escalated this year after Huarong became a bad debt manager in the state. delay its economic results in March and another developer, China Fortune Land Development, default A $ 530 million bond in February.

As tighten credit conditions In China, investors are receiving more of the default defense in international markets and are alert to signs of financial pollution. More than $ 100 billion owed by Chinese companies is owed this year.

Shares of Evergrand, which has nearly Rmb2tn ($ 309 billion) liabilities and large Chinese dollar loans, have fallen 27 percent this year. Bonds denominated in mature dollars in 2025 fell 2 percent on Wednesday, trading at 71 cents a dollar.

This week, Bloomberg News reported that major Chinese banks with Rmb46bn in front of the company decided to renew their loans.

“The problem is that there’s a lot of smoke around, but it’s hard to know how much fire there is,” said Hong Kong GMT Research analyst Nigel Stevenson. “It will be very difficult to refinance at current levels, even if you are willing to pay interest rates,” he added.

It was in the middle of an evergrande sold huge last year its subsidiary, Hengda Real Estate, is linked to a plan to cancel its listing, which Fitch also dropped on Tuesday in Shenzhen.

Evergrande, including a company subsidiary of electric vehicle, has pledged to reduce its debt to Rmb150bn a year and has made numerous asset sales to raise money.

On Monday, after its shares were announced for the sale of a stake in a property unit located in the Chinese city of Hangzhou, this week it also filed a stake in an Internet company for $ 570 million.

“We believe the company’s debt reduction plan is feasible, but it carries a significant risk of execution,” Fitch said.