S&P says the company is in default

The stock and credit markets of China Evergrande Group plummeted even more on Tuesday, prompting fears of a wider spread following a warning by S&P Global Reitings about a probable default by the real estate developer.

After closing Monday at their lowest level in almost a decade, the insolvent developer’s shares plunged as much as 7% in Hong Kong. The price of the company’s 8.25 percent dollar bonds, which are due in 2022, dropped 0.3 cents to 24.9 cents.

Evergrande will face bond interest payments on Thursday

“We expect Beijing will only be forced to interfere when there is a widespread contagion that would bankrupt multiple major developers and pose systemic risks to the economy,” according to the S&P research.

Nonetheless, the issues might erode investor trust in China’s real estate industry, as well as credit markets with low ratings in general. Equities fell again on Tuesday, however some sectors of the market, such as Hong Kong real estate stocks, recovered from Monday’s drop.

Evergrande Chairman Hui Ka Yang stated that he is certain that the company will soon emerge from its darkest period, adding that the developer will expedite a full resumption of work to ensure assignment handover.

Interest payments on bank loans due this week have been canceled by Chinese officials, while interest payments on two of the developer’s bonds will begin on Thursday.