That's behind a pay wall so us plebs can't read it.
Yea, but the Chinese property market is worth over $50 trillion. There'll be a big wave if that falls off the cliff.This is the latest in the Evergrande saga and in the short term will impact global financial markets like it did a few months back. A lot of people own Evergrande Debt, I guess it was similar to owning Irish Bank Stocks pre crisis.
Not sure on the long term impacts of global growth, but it will certainly have an impact on financial markets and the local chinese property market.
Another soft landing?The size of this default is the difference though. The question is if they can contain it as a techincal defaul or if the company is actually defaulting and triggering cross default clauses in bonds. I have heard some rubbish about how this won't lead to contagion because they own land and not financial assets like banks during the financial crisis. It's crazy stuff. There are funds and banks out there with huge exposure never mind if this causes problems for the Chineese economy and the global imapct.
There is no chance that a company can default on $19 billion of international debt and there not be consequences. And that's igoring that a default by Evergrande will probably lead to a default for Kaisa in Hong Kong and that is another $12 billion. China have said they can contain it. I have heard that before.
Yea, but the Chinese property market is worth over $50 trillion. There'll be a big wave if that falls off the cliff.
In Ireland between 1 and 1.5% of properties change hands each year and supply and demand changes within that small band can shift the value of the entire stock.
If the Chinese market is similar then $750 billion worth of property changes hands each year so the impact of a $300 billion in debt default could have a profound impact on Chinese property prices and all of the investments they underpin... I could be completely wrong, but I have the same feeling about this that I did about the US market in 2008 and how it would impact on us and I sold my rentals in September of that year.
The size of this default is the difference though. The question is if they can contain it as a techincal defaul or if the company is actually defaulting and triggering cross default clauses in bonds. I have heard some rubbish about how this won't lead to contagion because they own land and not financial assets like banks during the financial crisis. It's crazy stuff. There are funds and banks out there with huge exposure never mind if this causes problems for the Chineese economy and the global imapct.
There is no chance that a company can default on $19 billion of international debt and there not be consequences. And that's igoring that a default by Evergrande will probably lead to a default for Kaisa in Hong Kong and that is another $12 billion. China have said they can contain it. I have heard that before.
They have missed a $260m payment deadline which equates to a technical default, its not quite at the stage of a default on the full amount.
The bonds have been trading in the distressed / high yield bucket for sometime now, which requires larger capital requirements and tighter limits. So I expect there has been active derisking of these assets from the balance sheets of FIs.
I would highly doubt that the default of the debt would have a serious systemic impact to banks similar to 2008. Yes banks may lose money, but it is money they have set aside to withstand this kind of default.
The question is if the missed interest payments will trigger a cross default or restrucring event. If ISDA decides it is an event of default, you will have Credit Default Swaps triggering and bonds with cross clause clauses will become payable.
Nobody is talking about the collapse of banks but the idea that a property company with $300 billion worth of liabilities without huge economic reprecussions for China/Asia and the World is fanciful. There is a reason why China is trying to contain it. China is pouring liquidity into their banks because of property market issues. There is a huge amount of individual retail money tied up in the company through property paid for but will never be built and retail investment. Never mind the $19 billion of international bonds. I heard one fund alone has $500m invested.
Evergrande were allowed run up $300 billion of liabilities because people thought it was too big to fail and that China would protect it. Heard that before. I have heard that have significant property assets worth a lot of money. Heard that before. I have heard it is just a liquidity issue. Heard that before. I heard that it can be contained. I heard that before.
I think the concern is that the Chinese haven't been completely honest about the issue because, well, the Chinese are never completely honest about anything.Of course if this leads to a property price crash in China there will be other impacts, but I don't see it on the same scale as 2008.
I think the concern is that the Chinese haven't been completely honest about the issue because, well, the Chinese are never completely honest about anything.
Yes, there's been plenty of coverage on Evergrande on Bloomberg and elsewhere.The FT has documented the Evergrande saga well since September, so although it is hitting mainstream media today, it has been out there in the more niche media markets. Chinese markets are trading at a discount because of this and ultimately if they default on everything the exposure outside of china is 20bln or so which I believe can be absorbed.
I think it's more a reflection of authoritarian police states in particular rather than Chinese people in general.I think that comment is stereotyping and entire nation / culture.
Far be it from me to champion political correctness, but it might be more accurate to say that the Chinese Government (aka The Chinese Communist Party) are never honest about anything.I think the concern is that the Chinese haven't been completely honest about the issue because, well, the Chinese are never completely honest about anything.
Good point, but maybe it was implied in the context of this thread since it is the Chinese Government rather than the Chinese people as a cohort who gather, process and release the data in question.Far be it from me to champion political correctness, but it might be more accurate to say that the Chinese Government (aka The Chinese Communist Party) are never honest about anything.
That way you won't get accused of stereotyping!
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