China Evergrande's debt crisis

Evergrande had grown into one of China's largest property developers by borrowing aggressively to fund rapid expansion, a strategy that worked as long as new borrowing and continuous sales of pre-built apartments kept cash flowing in faster than debts came due. Chinese regulators introduced new borrowing limits on highly leveraged developers in 2020 aimed at cooling an overheated property sector, and those restrictions cut off much of Evergrande's ability to raise fresh financing just as its existing obligations kept mounting, leaving the company owing an estimated $300 billion or more to creditors, suppliers and homebuyers. Evergrande missed bond coupon payments through the second half of 2021, and Fitch declared the company in restricted default in December after a grace period on two payments lapsed, a status that risked triggering cross-defaults across its roughly $19 billion in dollar-denominated debt. The default set off a wider liquidity crisis across China's property sector, with more than 50 other developers eventually defaulting and construction stalling on thousands of unfinished homes; Evergrande itself filed for US bankruptcy protection in August 2023 as part of an effort to shield its overseas assets during restructuring.