CHN - The Cauldron Is Boiling Now

• Shenzhen-based developer Fantasia Holdings failed to repay $206 million in bonds that matured on Monday. Separately, Country Garden’s property management unit said that Fantasia had failed to repay a 700 million yuan ($109 million) company loan. It added that Fantasia had informed the company that it would most likely "default on its external debts."
• Thereafter, S&P and Moody’s assigned Fantasia "default" credit ratings and stated that failure to pay principal would likely result in the company defaulting on its remaining bonds.
• The question now arises of what will happen to the Chinese financial system if property defaults become rampant. The property sector is critical to China’s economy, accounting for approximately 30% of GDP.

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