Fears of global shockwaves from Chinese builder's debts ease

Fears that a Chinese real estate developer’s possible default on multibillion-dollar debts might send shockwaves through global financial markets appear to be easing as creditors wait to see how much they might recover

BEIJING -- Fears that a Chinese real estate developer’s possible default on multibillion-dollar debts might send shockwaves through global financial markets appeared to ease Thursday as creditors waited to see how much they might recover.

Shares of Evergrande Group, one of China’s biggest private sector conglomerates, rose 18% in Hong Kong after the company said it would pay interest to bondholders in China. The company gave no sign whether it would make a payment due Thursday on a separate bond abroad.

Evergrande’s struggle has raised fears it might destabilize China’s financial system and set off a global chain reaction. But economists said while banks and other creditors would lose money, there appeared to be little way a default on its 2 trillion yuan ($310 billion) in debt would hurt the Chinese system or feed through to markets abroad.

“It’s definitely a local problem in China,” said Robert Carnell, head of Asian research for ING.