HONG KONG :Rating agency Fitch said that numerous sectors could be exposed to heightened credit risk if China's No.2 property developer Evergrande Group were to default, although the overall impact on the banking sector would be manageable.
"We believe a default would reinforce credit polarisation among homebuilders and could result in headwinds for some smaller banks," Fitch said in a note https://bit.ly/3CbhKPt late on Tuesday. Fitch said 572 billion yuan of Evergrande's borrowings were held by banks and other financial institutions, but banks may also have indirect exposure to the developer's suppliers, who are owed 667 billion yuan for goods and services.
Evergrande's Hong Kong-listed stock slipped as much as another 5per cent to HKUS$2.82 on Wednesday morning, a fresh low since Jan 2014. Fitch also said the risk of significant pressure on house prices in the event of a default would be low, and it expected the government would act to protect households’ interests to ensure home deliveries.
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