China’s bubble economy: Evergrande defaults for the 1st time!

FalconSlayers

जयेम सं युधि स्पृध:
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China’s Evergrande defaults on dollar debt
Fitch Ratings cuts property giant’s long-term foreign currency issuer default rating to restricted default.


Chinese property giant Evergrande has defaulted on its dollar debt for the first time [FILE: Aly Song/Reuters]
By Rebecca Choong WilkinsBloomberg
Published On 9 Dec 20219 Dec 2021

China Evergrande Group, the Chinese developer whose liquidity crisis has shaken the nation’s credit markets, has defaulted for the first time on dollar debt.
The property giant’s long-term foreign-currency issuer default rating was cut to restricted default at Fitch Ratings, which cited missed dollar bond interest payments whose grace period expired Dec. 6.

The development marks the beginning of the end for the sprawling real estate empire started 25 years ago by founder Hui Ka Yan, setting off a lengthy battle over who gets paid from what remains. It also poses the biggest challenge yet to the Chinese government’s efforts to prevent a debt crisis in the property sector from sparking broader contagion. Authorities have scored some successes, with markets taking the most recent developer debt stumbles in their stride after a reserve-ratio cut announced by the central bank on Monday.

Evergrande, which disclosed more than $300 billion of total liabilities as of June, said in a brief exchange filing on Dec. 3 that it plans to “actively engage” with offshore creditors on a restructuring plan. The company is planning to include all its offshore public bonds and private debt obligations in the restructuring, people familiar with the matter said separately.

Deep haircuts
Bondholders of $19.2 billion in Evergrande dollar notes face deep haircuts as the company overhauls its mammoth balance sheet without a government bailout — a process that promises to be long, contentious and potentially risky for Asia’s largest economy.

Some of Evergrande’s dollar notes are trading in deeply distressed territory at about 20 cents on the dollar. The key for bondholders is whether the company can speed up home sales and unload assets.

Officials are taking a hands-on role at Evergrande. Chairman Hui was summoned by the government of the southern province of Guangdong where it’s based last week after the company said it plans to work with creditors on a restructuring plan.

Authorities will send a working group to urge the builder to manage risks, as well as strengthen internal controls and ensure normal operations. The company on Monday said state representatives have taken the majority of seats on a new risk management committee.

 

Tshering22

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Kaisa as well
According to news reports, about 21 top real estate firms are nearing default. On top of that there is a serious crisis of energy for their manufacturing. Then there are relentless floods that have downed 21 out of 31 provinces.

Question for all economists: Where the heck is China getting the money to keep pumping military bases, increase covert activities, harass Taiwan, us, Americans, entire Southeast Asia, etc. and keep buying new things?
 

jadoogar

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According to news reports, about 21 top real estate firms are nearing default. On top of that there is a serious crisis of energy for their manufacturing. Then there are relentless floods that have downed 21 out of 31 provinces.

Question for all economists: Where the heck is China getting the money to keep pumping military bases, increase covert activities, harass Taiwan, us, Americans, entire Southeast Asia, etc. and keep buying new things?
High weightage in stock and bond indices could provide steady passive investor inflow?
 

no smoking

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According to news reports, about 21 top real estate firms are nearing default. On top of that there is a serious crisis of energy for their manufacturing. Then there are relentless floods that have downed 21 out of 31 provinces.

Question for all economists: Where the heck is China getting the money to keep pumping military bases, increase covert activities, harass Taiwan, us, Americans, entire Southeast Asia, etc. and keep buying new things?
All these top real estate firms are private owned, defaulting their debt will mostly impact the debtors (private and foreign).

Crisis of energy, is more like a mismanagement:
1. industrial production outperform everyone's expectation including energy supply planners;
2. Gov wants to reduce those high energy consumption but low margin factories;
3. The wind power output is below the planned because less wind in major industrial area.
This crisis, however, not big enough and long enough to affect Chinese industrial production. In Nov-21, the output is still growing.

The flood? Not sure where you got that 21 out of 31 from.
But, I think the way of presentation is kind misleading: in these 21 provinces, is the whole province being threated by flood? or just a tiny part?
So far, I haven't seen any Chinese news of PLA national mobilization for the flood.
So, I doubt the scale of the flood.
 

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