Evergrande and Kaisa enter ‘restricted default’

Chinese developers Evergrande and Kaisa are now officially in default after missing bond payments earlier this week. Fitch yesterday became the first of the world’s big credit rating agencies to make the declaration, after Evergrande missed an already delayed $82.5m bond payment on Monday. Fitch said it had sought confirmation of payment from Evergrande, but the company had not responded. “We are therefore assuming that they were not paid,” the agency said. Fitch had previously rated Evergrande’s overseas bonds as a “C”, meaning that they were near to default. It has now downgraded them to “restricted default”, which means that they are in default but the company has not yet entered into formal bankruptcy proceedings. Fitch has also downgraded Kaisa to “restricted default” after it failed to repay a $400m bond that matured on Tuesday. Kaisa has about $12bn of international bonds outstanding, compared with $19bn for Evergrande. Sunshine 100, a smaller construction business, defaulted on a $170m bond due last weekend. The Times (£) The FT (£)