Problems at China’s indebted property developer Evergrande Group have spread across the world, with global markets collapsing as the property developer’s fate remains uncertain. On the subject, on Tuesday, Kotak Mahindra Bank MD and CEO Uday Kotak compared the Evergrande Group’s situation with Lehman Brothers from the United States.
The investment bank filed for bankruptcy in 2008, which is said to have played a major role in the global financial crisis of 2007-08. Kotak also said the Chinese real estate company’s crisis is reminiscent of the problems facing the Infrastructure Leasing & Financial Services (IL&FS) Group in India.
“Evergrande seems to be China’s Lehman moment. Reminds us of IL&FS. The Indian government acted quickly. Calm the financial markets. The government-appointed board of directors estimates a 61% recovery at IL&FS in a tweet.
Evergrande seems to be China’s Lehman moment. Reminds us of IL&FS. The Indian government acted quickly. Calm the financial markets. The government-appointed board of directors estimates a 61% recovery at IL&FS. Evergrande bonds in China trade at ~ 25 cents to a $.
– Uday Kotak (@udaybox) September 21, 2021
Also Read: Everything You Need To Know About China’s Evergrande Crisis And Why The Markets Are Nervous
IL&FS defaulted on its debt obligations in 2018, causing a liquidity crisis in the Indian financial system. The Indian government later replaced the company’s board of directors with a new one under the leadership of Kotak.
The Kotak-led board discovered that there was a complex network of over 250 companies that were part of the IL&FS group, which had over Rs 94,000 billion outstanding to lenders.
Kotak praised the Government of India’s efforts and said that its actions after IL&FS went bankrupt had calmed the financial markets. He added that the government-appointed board of directors estimates the group’s recovery at 61 percent.
The Evergrande Group has debt of approximately $ 304 billion, which includes loans, contract liabilities, trade payables, and current and deferred income tax liabilities. There is a fear that the group will fail to meet its payment obligations.
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