Real estate giant China Evergrande will be liquidated

Post by pertymcpert » Tue, Jan 30, 2024, 6:54 AM UTC

doughnutstracks wrote: post #175

berserk1010 wrote: post #49

A couple of things to note: 1.) Why did it take Evergrande 3 years to liquidate? In western countries, liquidation happens in a few months. One should note that Evergrande did not get that big by itself; obviously it had the support of CCP elites to secure huge bank loans. Therefore, when it went bankrupt, the delay was to allow these elites to pull money/liquidable assets out of Evergrande. Thus after 3 years, Everg…

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Post by harpiaharpyja » Tue, Jan 30, 2024, 7:04 AM UTC

fspeech wrote: post #201

nradov wrote: post #186

Earlier quoted context omitted.

This is more a sign that the bond rating process remains broken despite some superficial reforms after the 2008 financial crisis. The major rating agencies gave that Argentine bond a B rating which allows many institutional investors to buy, despite the reality that it's obviously garbage. Then when the next default hits the fund managers can blame their losses on the rating agencies. Nothing changes.

In what sense did the rating agencies do a terrible job here? First B is a junk rating, not investment grade. Secondly if you get paid 7.9% for six years plus a market price of 30 cents on the dollar you get back more than 75 cents on the dollar, which would have been comparable to the performance of US 30 year Treasury issued around the same time. People do realize that if the principal is not paid back then whether…

Post by petre » Tue, Jan 30, 2024, 7:16 AM UTC

hollerith wrote: post #178

thriftwy wrote: post #135

Earlier quoted context omitted.

What's wrong with Russian bonds? That land is unlikely to be going away, may contain even more mineral wealth and is climate change resistant.

The Kremlin has been saying that if the $300 billion worth of Russian Central Bank assets that were frozen in response to the invasion of Ukraine are confiscated (e.g., to give them to Ukraine), the Kremlin is going to respond by confiscating assets in Russia held by Westerners.

Post by vidarh » Tue, Jan 30, 2024, 7:39 AM UTC

loeg wrote: post #142

vidarh wrote: post #79

Earlier quoted context omitted.

Depends on how they operate. Selling subsidiaries as going concerns or handing their shares to creditors of the parent are often options. It's in no way a given that a subsidiary is insolvent just because the parent is. This isn't unusual. E.g. when Commodore went bankrupt several subsidiaries continued to operate as long as they had stock, and the UK subsidiary even tried to organize a buyout of its parent.

> It's in no way a given that a subsidiary is insolvent just because the parent is. In general, sure, but in this case, no. The subsidiary has, at most, $260B of assets against $275B of debt. It's insolvent.

Post by ffgjgf1 » Tue, Jan 30, 2024, 7:54 AM UTC

r00fus wrote: post #83

berserk1010 wrote: post #49

A couple of things to note: 1.) Why did it take Evergrande 3 years to liquidate? In western countries, liquidation happens in a few months. One should note that Evergrande did not get that big by itself; obviously it had the support of CCP elites to secure huge bank loans. Therefore, when it went bankrupt, the delay was to allow these elites to pull money/liquidable assets out of Evergrande. Thus after 3 years, Everg…

> 1.) Why did it take Evergrande 3 years to liquidate? Because this isn't "the West". China/CCP is specifically unwinding this slowly to avoid cross-market contagion.