Evergrande: Not out of the woods yet, contagion risks a plenty

The troubled Chinese property developer, Evergrande, has threatened to cripple the Chinese property sector and despite the news that Evergrande has managed to meet a debt obligation, concerns linger in the markets. 

Evergrande, the world's most indebted developer, has been stumbling from deadline to deadline in recent weeks with more than $300 billion in liabilities, $19 billion of which are dollar bonds.

However, the latest payments were made at the end of a 30-day grace period that ended Wednesday, and this has given risk a bit of relief. This was, however, the third time in the past month the company has paid up perilously close to a deadline. The bonds had a total of more than $148 million due.

Evergrande has come under pressure from its other creditors at home and a stifling funding squeeze has cast a shadow over hundreds of its residential projects. This is raising concern and putting a focus to other cash-strapped developers such as Kaisa Group.

''Kaisa has the most offshore debt of any Chinese developer after Evergrande and pleaded for help from creditors this week. It has coupon payments totalling over $59 million due on Thursday and Friday, with 30-day grace periods for both,'' Reuters reported. 

Overall, the firm has tentacles that reach into the farthest corners of the Chinese financial system, wrapping around banks and shadow lenders. Markets are not out of the woods yet, but regulators and government think tanks have also held meetings with developers in the past few weeks. Therefore, the market is expecting some easing in credit and housing policies to prevent a hard landing of the sector.