Bitcoin price tumbles below $50K as Evergrande defaults

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Chi­nese prop­er­ty giant Ever­grande has default­ed on its debt to glob­al investors, cred­it rat­ing firm Fitch Rat­ings report­ed today. 

Fast facts

  • Fitch has down­grad­ed Ever­grande to “Restrict­ed Default” after its dead­line to pay inter­est due on two dol­lar-denom­i­nat­ed bonds passed on Mon­day. The actu­al pay­ments were due a month ago and the grace peri­od expired on Mon­day. This means that Ever­grande has failed to meet its finan­cial oblig­a­tions but has not for­mal­ly filed for bank­rupt­cy or entered into a liq­ui­da­tion process that would halt its oper­a­tions. Ever­grande has been avoid­ing default on its off­shore bonds by pay­ing over­due inter­est with­in the grace peri­od until now. 
  • Evergrande’s total lia­bil­i­ties stand at over US$300 bil­lion. Ever­grande warned about the default at a stock exchange fil­ing last week when it said that it may not have enough funds to meet its finan­cial lia­bil­i­ties and is work­ing with off­shore cred­i­tors on a restruc­tur­ing plan. Accord­ing to the Fitch report, Ever­grande also announced the for­ma­tion of a Risk Man­age­ment Com­mit­tee made up of the firm’s senior man­age­ment and rep­re­sen­ta­tives from Guangzhou state-owned enter­pris­es and finan­cial insti­tu­tions to mit­i­gate future risks on Mon­day. Ana­lysts are wor­ried about the dis­as­trous impact of the col­lapse of a For­tune 500 com­pa­ny on not only the Chi­nese real estate mar­ket but also its pre­cip­i­tat­ing effect on the glob­al finan­cial market. 
  • Fol­low­ing the announce­ment of Evergrande’s default, Bitcoin’s price took a tum­ble. While the price of Bit­coin was hov­er­ing around US$50,000 in the past few days, it has now slumped to US$49,083.27 at press time, accord­ing to Coin­Mar­ket­Cap data. Ethereum’s price, how­ev­er, is hold­ing steady above US$4,200 at the time of writing. 

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