Country Garden, Evergrande Failure Could Devastate Many Stakeholders, Indebted Firms: Experts

Unfinished apartment buildings at the Phoenix City residential project, developed by Country Garden Holdings Co., in Shanghai, China, on Jan. 17, 2022. The crisis engulfing China's property sector has the developer's shares and bonds hammered amid fears that a reportedly failed fundraising effort may be a harbinger of waning confidence. Qilai Shen/Bloomberg via Getty Images

The knock-on effect of the potential debt defaults of China’s two most indebted property companies—Country Garden and Evergrande—will not only be devastating for their various stakeholders, but it could also have a catastrophic effect on the fate of other debt-ridden Chinese companies and their future ability to raise capital from the international capital market, according to financial experts.

Their default could also have spillover effects on the global market investors, who could lose confidence in Chinese assets and seek safer havens.