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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

#51

Post by jerf »

LurkingPenguin wrote: post #41
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...

Leverage in the US is very high too. I'm thinking the next crisis will in the end be known as the Leverage Crisis, because it's leverage that will take what was already going to be a big financial crisis into financial catastrophe. It really wouldn't take much to tip us over right now because the ever-rising stock prices are encouraging everyone and their duck to leverage to the max, further pushing up prices... it's not a good cycle.

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

#53

Post by uoaei »

xxpor wrote: post #44
rp1 wrote: post #42

Earlier quoted context omitted.

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.

The government should do everything* to protect me, the citizen.

*Except the things that make me confused and angry, even if they benefit other citizens.

Welcome to neoliberal hell.

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

#54

Post by nwidynski »

nikanj wrote: post #48

Isn’t $148 million like four meme NFTs? Why would a large company be teetering on the edge for such a small amount of money?

The payment on the debt was due today, and as of 3 hours ago that timeframe has passed, which is why the default got announced by the DMSA.

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

#55

Post by duxup »

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.

What is the US supposed to do, prevent anyone from being exposed to this situation?

That's a wide ranging / impossible mandate there.

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

#56

Post by weego »

nikanj wrote: post #48

Isn’t $148 million like four meme NFTs? Why would a large company be teetering on the edge for such a small amount of money?

Because they actually are in debt to the tune of $300bn but they've managed to keep playing so they stay afloat. This would be the moment the music stops.

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

#57

Post by ndesaulniers »

nikanj wrote: post #48

Isn’t $148 million like four meme NFTs? Why would a large company be teetering on the edge for such a small amount of money?

Because they have multiple different bonds outstanding with differing maturity dates...failure to pay back one is indicative that there may be successive failures after this one.

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

#58

Post by nwidynski »

qnsi wrote: post #47

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.

Well this time they already were inside a 30-day grace period which as of 3 hours ago they missed aswell, hence the default.

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

#59

Post by mpalczewski »

qnsi wrote: post #47

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.

The news doesn't decide what to run based on importance but rather based on salience.

As someone that is financially versed, even I have trouble grasping the why this is a big deal. Complicated things don't get run.

Whereas J&J factory problems, that sounds like a covid thing and it's easy to see why that might be important.

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

#60

Post by bsanr2 »

WhisperingShiba wrote: post #36
bsanr2 wrote: post #29

Earlier quoted context omitted.

A lot of people seem intent on letting us know that this is the case, at least.

The economy is held up by belief, and while I'm sure there are some good intentioned people telling us this, there are certainly some people who are using this as an opportunity to change financial positions.

It's important to point out that DMSA's release alledges that media has been trading on rumors that Evergrande had made the earlier missed debt payments before the grace period ended, when in fact it it had not. Several commentators over the past few weeks have pointed out that all of the media reports saying that the payments had been made were circuitously cited; no one had heard from a creditor directly. Now we have.

So now one has to wonder why essentially every major journalistic entity involved in the financial space would bet their reputation on hearsay, for something with such limited effects; especially when it would only buy a few weeks, at most, of this false belief.

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