The Evergrande crisis continued to smolder last week. In some places it was even blazing and S&P (Standard & Poor's) gave the China Evergrande Group another one Downgrade. China Evergrande and the subsidiaries Hengda and Tianjin Holding were downgraded by two notches from B- to CCC by the rating agency. From now on, company shares are considered "extremely risky".
Evergrande liquidity eroded
The reason for the renewed downgrade is the increasingly eroding liquidity of the group. Meanwhile, Evergrande is trying to counteract this by selling real estate and investments. However, in the opinion of the analysts just drops in an ocean of debt.
As the week wore on, more and more companies filed lawsuits over unpaid bills. According to reports from state media, the lawsuits will be dealt with centrally at the Guangzhou court. Previously, legal recourse had been taken in the respective provinces.
Further developments are eagerly awaited. Is Evergrande too big for the final fall and will Beijing intervene in some form? In the course of the week, the social (Chinese) media made the rounds that the administration sees the crisis merely as a kind of "stress test" for Evergrande, that neither intervention is needed, nor is bankruptcy in the room.
After that, that Evergrande will survive the "test" without help, it does not look like at the moment.
Evergrande sticks to auto plans
In the meantime, and with a considerable delay, the crisis has also become an issue in Sweden. Dagens Industri (DI) berichtet about the mountain of debt and the sale of company shares. Is the sale of the former Saab factory and NEVS an issue? No, it's not, says Stefan Tilk, CEO of NEVS to DI. He had not received any signals from China that would indicate a sale or reduction of the investment in Trollhättan.
And: NEVS is important for the implementation of the electric car plans.
NEVS is completely dependent on payments from China. The company does not have an independent business model, its services are primarily provided for Evergrande Auto. Other income generated with third parties has so far not been enough to cover the costs of almost 800 employees.
Is it realistic to stick to the car plans while the regular business is close to the brink? Especially against the background that investments in the billions are due before the business will pay off. There are experts who see it that way. That the group is significantly reducing its real estate business, but is still investing in the construction of e-cars, estimates Frederic Cho, chairman of the China Sweden Trade Council and independent China expert as realistic.