The neighbouring comments only give you a part of the answer. Yes there is psychological things, i.e., "if they default, could other default" that makes people

The neighbouring comments only give you a part of the answer. Yes there is psychological things, i.e., "if they default, could other default" that makes people more sceptical wrt to the same class of assets (in this case property handlers with exposure in China). But there is _also_ the thing that some institutional investors are only allowed to hold certain parts of their assets in certain risk classes. The subprime crisis got triggered, by one-to-many defaults, which triggered a downgrade in the rating of the securities that the single loans were packaged into, which _forced_ institutional investors (think pension funds) to sell those, which depressed prices, which made the securities even more risky, which let to further downgrades and so on. But there is also the point that the investors of Evergrande may have planned these payments for their obligations. Which, depending on their current stability, may make them unable to honour their obligations, which makes them go into default. Which can then trigger a downgrade of their rating and we are back to the setting above. Unless you know about the exact structure and timing of all payments of all investors and how they cover their payments. There is really no way to be sure that it doesn't lead to a cascade. There is also no reason that it _has_ to lead to a cascade of course.