(Bloomberg) -- China Evergrande Group's dollar bonds are falling to fresh lows, after a report that the firm plans to suspend loan interest payments and Fitch moved to cut its credit rating.
The developer's dollar bond due 2025 fell 1.5 cents on the dollar to 24.2 cents, after REDD reported Wednesday that Evergrande plans to suspend interest payments on loans from two banks due Sept. 21. and asked a lender to wait for instructions about an extension plan.
Fitch Ratings had earlier slashed Evergrande's credit rating deeper into junk, to CC from CCC+. “The downgrade reflects our view that a default of some kind appears probable,” Fitch analysts wrote in a note. The move came a day after Moody's Investors Service cut Evergrande's credit rating by three notches to Ca, its third downgrade of the real estate giant since June.
The world's most indebted developer has become one of the biggest financial worries in China, given its teetering pile of $305 billion in liabilities to banks, shadow lenders, companies, investors, vendors and home buyers. Investor concerns about a possible payment failure at Evergrande have prompted dramatic declines in the firm's bonds in recent weeks and triggered fears about contagion risk in the broader credit market.
The company did not immediately respond to request for comment about Fitch's downgrade or the report of the planned suspension of loan interest payments.
Evergrande itself last week warned of default risks if its efforts to raise cash fall short. The company separately said on Friday its contracted sales in August, including those to suppliers and contractors to offset payments, dropped 26% compared with a year ago.
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