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Evergrande teeters on edge of default as $148M payment falls due

reuters.com

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Re: Evergrande teeters on edge of default as $148M payment falls due

#41

Post by LurkingPenguin »

mmastrac wrote: post #20

How much exposure does the Western world have to this? My guess would be "not much". It'll sting some emerging market investors, but I don't think you'll see a massive knock-on here.

> It'll sting some emerging market investors, but I don't think you'll see a massive knock-on here.

China has basically been the single biggest driver of global growth over the past decade. Its highly overleveraged real estate market is a huge threat to its overall economy, and that has plenty of potential to create a massive knock-on.

https://www.reuters.com/article/us-economy-global-kemp-colum...

Re: Evergrande teeters on edge of default as $148M payment falls due

#42

Post by rp1 »

Specie33 wrote: post #26

Interesting about this is that Evergrande is defaulting only on foreign held debt. Not internal debt after a ccp mandate. If their economy continues its downturn then this precedent would hold for all debt. I would really watch personal funds and investments and insure they dont hold any chinese debt as an asset.

China has been waging economic warfare via equity markets for a while now. The U.S. hasn’t done anything to protect investors from billions in losses. Totally embarrassing.

Re: Evergrande teeters on edge of default as $148M payment falls due

#43

Post by HenryKissinger »

rp1 wrote: post #42
Specie33 wrote: post #26

Interesting about this is that Evergrande is defaulting only on foreign held debt. Not internal debt after a ccp mandate. If their economy continues its downturn then this precedent would hold for all debt. I would really watch personal funds and investments and insure they dont hold any chinese debt as an asset.

China has been waging economic warfare via equity markets for a while now. The U.S. hasn’t done anything to protect investors from billions in losses. Totally embarrassing.

The U.S. shouldn't protect investors from the free market? That's the free market at work. Investors are not entitled to be paid. All investments carry risk.

Re: Evergrande teeters on edge of default as $148M payment falls due

#44

Post by xxpor »

rp1 wrote: post #42
Specie33 wrote: post #26

Interesting about this is that Evergrande is defaulting only on foreign held debt. Not internal debt after a ccp mandate. If their economy continues its downturn then this precedent would hold for all debt. I would really watch personal funds and investments and insure they dont hold any chinese debt as an asset.

China has been waging economic warfare via equity markets for a while now. The U.S. hasn’t done anything to protect investors from billions in losses. Totally embarrassing.

A) What do you propose the US do?

B) Why should the US do anything? If your risk profile when dealing with Chinese companies doesn't include the risk that the CPC will change the rules of the game later to benefit the domestic economy, you're a sucker.

Re: Evergrande teeters on edge of default as $148M payment falls due

#45

Post by Kye »

dang wrote: post #28
polskibus wrote: post #3

original title is "Evergrande teeters on edge of default as $148 mln payment falls due". not exactly "defaults"

Yes - submitted title was "Evergrande defaults" and we've reverted it now. " Please use the original title, unless it is misleading or linkbait; don't editorialize. " https://news.ycombinator.com/newsguidelines.html

Worth noting it seems to have turned into a default in the hours since Reuters posted that. The editorialized title and actual title could come close to alignment if Reuters updates it.

Re: Evergrande teeters on edge of default as $148M payment falls due

#46

Post by klodolph »

01100011 wrote: post #33
mmastrac wrote: post #20

How much exposure does the Western world have to this? My guess would be "not much". It'll sting some emerging market investors, but I don't think you'll see a massive knock-on here.

Hasn't Ray Dalio been advocating investing in China for a couple of years now? His thesis is that the US is a world power on the decline and China will soon rise to take its place. I wonder how that worked out for him and his fund?

Bridgewater suffered massive losses and laid off a ton of staff a year or two ago. The losses were something like $12 billion in 2020. If you are hiring in the northeast, you've probably run into ex-Bridgewater employees.

Re: Evergrande teeters on edge of default as $148M payment falls due

#47

Post by qnsi »

This is not even frontpage of ft, bloomberg etc. Bloomberg Europe TV station talks about Johnson & Johnson factory problems in China but not Evergrande.

My reading from above pieces of information:

it's not that important yet. Maybe they will pay late again as they did previously when they were late one day.

Re: Evergrande teeters on edge of default as $148M payment falls due

#49

Post by xxpor »

JumpCrisscross wrote: post #23
bingohbangoh wrote: post #10

So is this still "the next Lehman brothers"? Or have we moved on to something else?

> is this still "the next Lehman brothers"? No, and it never was. With Lehman, the banks stopped lending to Lehman and then to everyone else. In China, Beijing can let Evergrande default while compelling lending to peripheral players. Thise players know this. The market knows this. That makes contagion risk de minimis . (For Western central banks, the analogous policy tool is “extraordinary measures,” i.e. committing…

If it were a show of strength in the system why did they let the bubble get so big in the first place?

They've been using real estate as a place to stash everything bad for a while:

https://noahpinion.substack.com/p/what-if-xi-jinping-just-is...

Re: Evergrande teeters on edge of default as $148M payment falls due

#50

Post by mattbrewsbytes »

bingohbangoh wrote: post #10

So is this still "the next Lehman brothers"? Or have we moved on to something else?

Like software Q&A's the answer might be "it depends".

Imagine there are EU/US banks that have loaned money to Evergrande or any related domino that may fall.

I imagine a loan from a bank is listed as an asset for the bank because they are charging interest monthly and it produces income for the bank. Now they don't have that income because the company isn't paying. It now moves to the liability part of the balance sheet.

One of the elements of the 2008 crisis was mortgage backed securities, bundling of mortgages sold as a security. What if these banks have done the same thing with Commercial mortgages/bonds? How many derivatives are based on these loans/bonds Evergrande isn't paying on? Zero, then likely no "contagion". Many? maybe they are isolated to China?

I think its likely an onion that is peeling back its layers and we don't know the full impact until its done.

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