• About Us
  • Careers
  • Brand Partnerships
TFI Official Merchandise
TFI English
TFI हिन्दी
Tuesday, February 7, 2023
TFIGlobal
TFIGlobal
Right Arm. Round the World. FAST.
No Result
View All Result
  • Premium
  • Indo-Pacific
  • Americas
  • Canada
  • Indian Subcontinent
  • West Asia
  • Europe
  • Africa
  • The Caribbean
  • Premium
  • Indo-Pacific
  • Americas
  • Canada
  • Indian Subcontinent
  • West Asia
  • Europe
  • Africa
  • The Caribbean
TFIGlobal
TFIGlobal
No Result
View All Result

After Evergrande, another real estate giant Fantasia bites the dust in China

Akshay Narang by Akshay Narang
October 5, 2021
in China
Reading Time: 4 mins read
0
Fantasia Group
1.2k
VIEWS
Share on FacebookShare on Twitter

China’s fragile real estate bubble has started bursting already and it is all set to ruin the Chinese economy. China Evergrande Group, which is the second-largest real estate group in the Communist nation, is on the brink of defaulting on its debt obligations. 

However, while the world looks at Evergrande Group’s downfall anxiously, a bigger debt crisis is evolving in China. In fact, another Chinese property developer has bitten the dust which exposes how China’s heavily indebted real estate sector is a ticking time bomb that can explode any time and lead to an unprecedented collapse in the Chinese economy. 

Also Read

Germany hard core PR strategies for China put to work in Africa

Colombia and Ecuador join forces to fight foreign powers

Fantasia Holdings Group about to fall apart

Fantasia Holdings Group, a leading Chinese property developer, said on Monday that it had failed to repay $206 million in debts due on October 4. This is a new sign of tight liquidity and growing distress in the Chinese real estate sector. 

The Fantasia Holdings Group had raised $500 million in the year 2016. The debt fell due in 2021, but the miserable position of the Chinese real estate market has crippled the property developer. In a statement to the Hong Kong stock exchange, the Fantasia Holdings Group said, “The company did not make the payment on that day.”

Meanwhile, Fitch Ratings has cut Fantasia’s credit grade by several notches to CCC, whereas S&P Global Ratings lowered too has downgraded Fantasia’s long-term ratings from B to CCC. Fitch Ratings said, “The downgrade reflects the default risk on Fantasia’s upcoming U.S.-dollar bond maturities, given its tight offshore liquidity position.” 

How big is China’s real estate bubble? 

The position of China’s real estate market is pretty bad. The Fantasia Group Holdings itself does not pose a major risk to the broader Chinese bond markets. The fact remains that it is much smaller in size when compared to the Evergrande Group. 

As per data compiled by Bloomberg, Fantasia ranked 60th in terms of contracted sales in the first quarter of this year as against the 3rd rank for Evergrande Group. Fantasia’s total liabilities stood at $12.9 billion as of June 30, which dwarfs in comparison to Evergrande’s liabilities of $304.5 billion. Also, Fantasia’s offshore and local bonds amount to $4.7 billion as compared to Evergrande’s $27.6 billion. 

However, Fantasia’s repayment default has corroborated concerns of a market contagion arising out of Evergrande’s imminent downfall. The fact remains that much of China’s real estate market growth is not based on useful activity. This is why the debt-driven real estate sector of China is suddenly staring into a deep crisis. 

The Chinese government did try to cool the real estate bubble by curbing excess leverage and denying the liberty enjoyed by China’s real estate giants in the property sector to refinance debt. 

However, this is exposing the issues of tight liquidity and cash crunch in the case of companies like Evergrande Group and Fantasia. The Chinese real estate giants are getting overstretched. Now, as companies fail to meet their debt obligations or at least stand at the risk of failing to meet them, the Chinese real estate sector is facing a contagion effect. 

China’s hidden debt troubles

China’s real estate bubble and debt crisis are bigger than you can imagine. Fitch Ratings said, “The existence of undisclosed liabilities could significantly affect our leverage, coverage and liquidity calculations and forecasts.” 

As per Bloomberg, Fantasia’s nonpayment underscores the struggle of investors to identify opaque debt obligations in the Chinese real estate sector. Only last week, Fantasia had refuted a report that money for a privately placed bond had not been transferred. 

China’s hidden debt is in any case a huge problem. There is a culture of undertaking opaque debt obligations in China and even the local Chinese governments have formed local government financing vehicles, or LGFVs. 

These LGFVs undertake most of the debt obligations for Belt and Road Initiative (BRI) projects and other government expenditures. This debt should technically amount to local government debt, but local governments in the Communist nation seem to bypass debt obligations and keep their balance sheets clean by relying on LGFVs.

Ultimately, the debt crisis in China’s real estate bubble is going to spill over to other sectors of the Chinese economy. With more debt defaults, Chinese and overseas investors are bound to feel the pain of a bursting Chinese real estate bubble.

Tags: ChinaEvergrandeEvergrande groupExhaustive ReadsFantasia Holdings GroupXi Jinping
ShareTweetSend
Previous Post

Xi Jinping finally kneels before Morrison, quietly buys Australian coal amid crippling blackouts

Next Post

The downfall of the Chinese economy is being scripted in Hong Kong

Also Read

Mongolia’s biggest shock to China is here

Mongolia’s biggest shock to China is here

February 5, 2023
EU Xinjiang

EU’s malicious encashment of forced labour is a revelation of its true evil face

February 4, 2023
China Children

China comes up with a bizarre idea to overcome demographic challenges

February 1, 2023
Czech Republic Taiwan

Taiwan friends a new ally in the Balkans

February 1, 2023
Load More

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms of use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

  • Trending
  • Comments
  • Latest
US Ukraine

Russia unearths USA’s empire of terror in Ukraine

February 4, 2023
Mongolia’s biggest shock to China is here

Mongolia’s biggest shock to China is here

February 5, 2023
Did Ukraine use innocent civilians as human shield against Russia in the name of evacuation?

Did Ukraine use innocent civilians as human shield against Russia in the name of evacuation?

May 9, 2022
Jordan B Peterson

The proposed demise of World Economic Forum! Courtesy- Jordan B. Peterson

February 2, 2023
Nord Stream US

An energy-secured Germany blames US for Nord Stream sabotage for the first time

February 4, 2023
Ignorant to his duties, Trudeau coughs up $21 million of taxpayers’ money for TikTok

Ignorant to his duties, Trudeau coughs up $21 million of taxpayers’ money for TikTok

February 7, 2023
Zelensky was All Set to be Removed in a Coup but Things Changed Pretty Drastically

Zelensky was All Set to be Removed in a Coup but Things Changed Pretty Drastically

February 7, 2023
After France, Mali throws UN out

After France, Mali throws UN out

February 7, 2023
Belize’s Unwavering Support for Taiwan is China’s Worst Nightmare

Belize’s Unwavering Support for Taiwan is China’s Worst Nightmare

February 6, 2023
Bahamas luxury tourism

Bahamas is Using Luxury Tourism to Bounce Back

February 6, 2023
Youtube Twitter Facebook
TFIGlobal
  • About us
  • Contact Us
  • Terms of use
  • Privacy Policy

©2023 - TFI MEDIA PRIVATE LIMITED

No Result
View All Result
  • Premium
  • Indo-Pacific
  • Americas
  • Canada
  • Indian Subcontinent
  • West Asia
  • Europe
  • Africa
  • The Caribbean

©2023 - TFI MEDIA PRIVATE LIMITED

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist

Follow us on Twitter

and never miss an insightful take by the TFIGlobal team

Follow @tfiglobal
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. View our Privacy and Cookie Policy.