Evergrande announces agreement to repay loan interest

The struggling Chinese real estate giant Evergrande announced on Wednesday that it had reached an agreement with bondholders to avoid ending up in default.

In a statement to the Shenzhen Stock Exchange (southern China), the group, which is drowning in debt of some 260 billion euros (more than 389 billion dollars), said that one of its subsidiaries, Hengda Real Estate, had negotiated an interest repayment plan on a bond maturing in 2025.

According to the financial agency Bloomberg, Evergrande would repay 232 million yuan (nearly 45.8 million dollars) of debt due Thursday on this 5.8% bond intended for the domestic bond market.

But the real estate giant, headquartered in Shenzhen, is far from off the hook given the total amount of its debt.

Other repayments fall due Thursday and the group did not say how it intends to honor them.

The fear of a Lehman Brothers scenario, whose bankruptcy precipitated the 2008 financial crisis in the United States, has plunged world markets in recent days.

All eyes are on the Chinese government, which has not specified whether it intends to fly to the aid of the private group.

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