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Christopher Langner

Evergrande's Bad Debt Tradition

Creditors keep allowing the developer to increase leverage. It can't go on forever.

It's becoming a tradition. China Evergrande Group has started the year three times since 2014 by asking bondholders to loosen restrictions on raising more debt and spending on acquisitions. It then goes on a borrowing and buying spree. The result has been a series of credit downgrades that has China's most indebted developer on the verge of the C category, associated with imminent default.

The Guangzhou-based company is offering notes payable in 2020 and 2022, Bloomberg News reported on Friday, citing people familiar with the matter. The move comes only three days after Evergrande got holders of its outstanding offshore bonds to relax constraints on how much debt the company can assume.