Evergrande

[Foxx]

The market crashed earlier this week because of a Chinese company called Evergrande. Some are speculating that this is China's Lehman moment. While that is up for debate, one thing is certain, the ramifications of this are not over as yet.

 

From Reuters:

 

Evergrande bondholders run out of hope for coupon payment on Thursday -source

HONG KONG/SINGAPORE, Sept 23 (Reuters) - China Evergrande Group (3333.HK) dollar bondholders were still waiting for information about a key interest payment due Thursday, with some holders having given up hope of getting a coupon payment by the deadline, a source familiar with the matter said.

 

The property developer was instead expected to provide more information in the coming month, the source said.

 

Global investors have been on tenterhooks ahead of Evergrande's payment obligations as there are fears its difficulties could pose systemic risks to China's financial system, and possibly spill over to other markets. ...

 

... "They don't want a default right now," said Connor Yuan, the head of emerging market flow credit trading for Asia at Goldman Sachs. "Given there is a 30-day grace period, I think today it's very likely the coupon won't be made but it is possible that they try to get a deal done in the next 30 days."

 

The Wall Street Journal reported separately on Thursday that Chinese authorities were asking local governments to prepare for the potential downfall of Evergrande, China's second-biggest property developer, citing officials familiar with the talks. ...

 

... SHARES BOUNCE BACK

Investors worry that the Evergrande rot could spread to creditors including banks in China and abroad, though analysts have been downplaying the risk that a collapse would result in a "Lehman moment," or a systemic liquidity crunch.

 

Still, central bankers say they are keeping a close eye on Evergrande. The Bank of England said on Thursday it did not expect the situation to go badly wrong and was cautiously optimistic Beijing would avoid any major issues.

 

Switzerland's central bank, meanwhile, said Evergrande should not be dismissed as a small, local problem. Shares in Evergrande rose nearly 18% on Thursday after it said it had resolved the coupon payment for one of its domestic, onshore bonds, though the stock is down more than 80% this year. ...

 

 

 

 

[Ann]

When they suddenly announced they could make their payment, people figured the Chinese government had stepped in. “Too big to fail.” Now, they aren’t paying?
 

Hubby was watching the market as this was happening. Supposedly HSBC and Deutcha bank are at risk if this goes sideways.

[Koko]

I read something the other day where the article was expecting the Chinese government to step in, but not before they let the company crash just enough to make it painful on the company, to dissuade other executives from doing whatever Evergrande did.

[Foxx]

If they do not make the payment today, which I believe the deadline has already passed in China's time zone (they may have ponied up), they will enter into a 30 day grace period (to make good on the debt), while being declared to be in "selective default". Additionally, they have another, mid 8 figure, bond interest payment due next week.

[GG1]

It’s a fool’s errand trying to look at a Chinese company from a Western investment view.  Nobody knows anything unless you have an inside to Xi’s ear.

 

Forget about watching this from an investment angle, because China’s valuations need to crash bigly because they do not follow accounting norms, and Xi needs to show his cards as the private sector around him implodes.

 

Meanwhile, two more tycoons were arrested as Xi is trying to get more state control over the enterprises.  The more he presses his thumb, the more his economy’s foundation will leak.

 

Evergrande’s default will probably not set off a Lehman chain reaction, but it will be a major warning sign for foreign capital to be more wary.   Xi thinks that he can ride this out and implement socialist control over the economy.

 

He won’t, and it will be an interesting test to see which US companies will have the balls to pull up shop first.  That’s when the chain reaction will start.

[Foxx]

While not Evergrande, it is closely related so I'll drop it here.

 

Due to their copyright policies (while I don't believe them to be enforceable because they are outside of the DMCA and Fair Use acts), I'll respect their wishes and just post the link.

 

The article does say that Evergrande did make their interest payment for an onshore bond Tuesday.

 

Chinese developer Sinic defaults as Evergrande deadline looms

[Hedge]

 

 

[GG1]

On 11/10/2021 at 3:04 PM, Hedge said:

 

 

 

Not quite certain that a small German bondholder can force these guys into involuntary bankruptcy.  Also missing is where they intend to file bankruptcy.

 

Good luck with that crusade

[Crap Throwing Monkey]

2 hours ago, GG1 said:

 

Not quite certain that a small German bondholder can force these guys into involuntary bankruptcy.  Also missing is where they intend to file bankruptcy.

 

Good luck with that crusade

 

That German group is getting out of this exactly what they paid for: publicity and credibility.

 

It's with the lunatic fringe, of course - when the first two results of searching your name bring up WSB and NaturalNews, you're probably nuts yourself.  But it's still more publicity and credibility than they had three days ago.