China's real estate giant Evergrande narrowly avoids default for the third time in 30 days

In mid-September, China's Evergrande Group, the country's second-largest real estate developer by sales, sparked fear in the global economy when the company's market valuation fell to an 11-year low. Global economists have warned that if Evergrande defaults, it could trigger a credit contagion similar to the Lehman Brothers bankruptcy in 2007. The Market Screening Agency (DMSA) appears to be preparing a bankruptcy filing against the real estate giant.

Credit contagion due to real estate looms – Evergrande Wobbles, Zillow Falters

The real estate market worldwide is struggling and a number of events have shown that large companies involved in real estate are struggling. China's Evergrande is just one piece of the puzzle as real estate markets around the world feel pressure. For example, the large real estate company Zillow revealed in the first week of November that the company would stop purchasing and renovating properties. Additionally, Zillow cut 25% of the company's workforce as Zillow lost $304 million in the third quarter of 2021.

News all around #Evergrande is very disturbing. A group is pushing, they have avoided failure; and on the other side #DMSA says that they, bondholders, have not received payment. Additional precautions are required. I'm outside. Maybe they want the big guys to sell before telling the truth.

— Raymond Taptuè (@RaymondTaptue1) November 11, 2021

China's Evergrande has been shaking for quite some time and on Wednesday folks suspected the real estate giant would default on its bond payments. According to a letter Evergrande did not meet the interest payment deadline from the bondholder DMSA. Despite the DMSA claims and its attempts to get other bondholders to file for bankruptcy against the Chinese real estate company, a Clearstream representative has told Bloomberg reported that the company had received interest payments and Evergrande had deferred late payment.

The US Federal Reserve warns that Evergrande's problems could pose risks to global economic growth

This is that third time Evergrande has narrowly avoided default in the last 30 days and DMSA is not the only associated company to complain. Rival Kaisa Group is one of Evergrande's largest bondholders and has already asked for help from creditors and the Chinese government. No one knows whether Beijing will continue to help Evergrande, but in recent weeks the company's top executives have met with China's regulators and government officials.

#Evergrande ’s story is another one about moral hazard and incentives that lead to wrongdoing.

China and the US are a lot more similar than they think. Human nature knows no boundaries.

— Andres Pineda (@andresp1neda) November 11, 2021

Meanwhile, the US Federal Reserve has too warned that Evergrande's problems could spread worldwide if not addressed soon, noting: "Stress in China could weigh on global financial markets by worsening risk sentiment, pose risks to global economic growth and impact the United States." As DMSA prepares to file for bankruptcy, the company's senior analyst Marco Metzler raised the Fed's warning.

“While the international financial market has so far responded to the financial turbulence surrounding the shaky giant Evergrande with remarkable basic confidence – one could also say: with remarkable naivety – the US Federal Reserve Bank confirmed our assessment yesterday,” emphasized Metzler. “In its most recent stability report, it explicitly pointed out the dangers that a collapse of Evergrande could have on the global financial system,” said the DMSA representative.

You've seen them #GME and #AMC Articles that bash these stocks day after day

That's what the media is saying now #Evergrande not default because they have made interest payments

DMSA says otherwise

I don't trust the media, they are trying to squeeze every cent they can out of Evergrande

— Batman Stonks (@StonksBatman) November 11, 2021

In addition, the recently published Bloomberg report quoting the Clearstream representative also cited two unnamed Evergrande bondholders. According to the anonymous sources, Evergrande had paid out interest payments to them on Wednesday afternoon (ET). The sources remained anonymous because “they were not authorized to speak publicly.” Evergrande's distress has caused Speculators are amazed Whether or not the U.S. housing market will stall next, especially after Zillow's issuances and the country's average home price rose over 25% in five quarters.

What do you think about the problems faced by Evergrande bondholders and the possibility of credit contagion? Let us know your thoughts on this topic in the comments below.

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