Fears of contagion from Chinese builder's debt problems ease

Fears that a Chinese real estate developer’s possible default on multibillion-dollar debts might send shockwaves through global financial markets appear to be easing as creditors wait to see how much they might recover

BEIJING -- Fears that a Chinese real estate developer’s possible default on multibillion-dollar debts might send shockwaves through global financial markets appeared to ease Thursday as creditors waited to see how much they might recover.

Shares of Evergrande Group, one of China’s biggest private sector conglomerates, rose 18% in Hong Kong after the company said it would pay interest to bondholders in China.

The company gave no sign whether it would make a payment due Thursday on a separate bond abroad.

Evergrande’s struggle has raised fears it might destabilize China’s financial system and set off a global chain reaction. But economists said while Chinese banks and other creditors are likely to suffer losses, there appeared to be little way a default on its 2 trillion yuan ($310 billion) in debt would hurt the Chinese system or feed through to financial markets abroad.