(THE BLAZE) – As if the global economic condition were not severe enough after months of devastating impacts wrought by the COVID-19 pandemic, investors are warning that the possible collapse of a major Chinese real estate development company named Evergrande could trigger a liquidity crisis similar to the one that occurred in late 2008, leading to a multi-year global recession.
China-based Evergrande is one of the world's largest real estate development companies, and it has been publicly facing financial woes for several months. It is believed to be the world's most indebted developer, with over $300 billion in estimated liabilities, according to Reuters. Alarm bells began blaring in late September when Evergrande missed several major international bond payments, leading several agencies to downgrade Evergrande's credit rating, which has exacerbated their inability to restructure their debt. Evergrande was formally declared in default earlier in December. A spokesperson for the company on Wednesday said that it was "actively engaging" with creditors in an attempt to avoid total collapse.
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