Business Evergrande Group has officially defaulted

Evergrande officially defaulted - DMSA is preparing bankruptcy proceedings against Evergrande Group

/PRNewswire/ -- China Evergrande Group today again defaulted on interest payments to international investors. DMSA itself is invested in these bonds and has...

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BERLIN, Nov. 10, 2021 /PRNewswire/ -- China Evergrande Group today again defaulted on interest payments to international investors. DMSA itself is invested in these bonds and has not received any interest payments until today's end of the grace period. Now DMSA is preparing bankruptcy proceedings against Evergrande and calls on all bond investors to join it.


China Evergrande Group, the second largest real estate developer in China, defaulted on interest payments on two bonds back in September, with the 30-day grace period still ending in October. However, shortly before the end of the grace period, the public was misled by rumors about alleged interest payments. The international media also took the rumors for granted. Only the DMSA - Deutsche Marktscreening Agentur (German Market Screening Agency) already recognized the default at that time and proved in a study that the bankruptcy of Evergrande, the world's most indebted corporation, could ultimately lead to a "Great Reset", i.e. the final meltdown of the global financial system.


(Note to journalists: See DMSA press releases dated Oct. 25 and Oct. 29, 2021, and the DMSA study "The Great Reset - Evergrande and the Final Meltdown of the Global Financial System"; all available via the DMSA homepage www.dmsa-agentur.de.)


"But while the international financial market has so far met the financial turmoil surrounding the teetering giant Evergrande with a remarkable basic confidence - one can also say: with remarkable naivety - the U.S. central bank Fed confirmed our view yesterday," says DMSA senior analyst Dr. Marco Metzler. "In its latest stability report, it explicitly pointed out the dangers that a collapse of Evergrande could have for the global financial system."


In order to be able to file for bankruptcy against the company as a creditor, DMSA itself invested in Evergrande bonds, whose grace period expired today (Nov. 10, 2021). In total, Evergrande would have had to pay $148.13 million in interest on three bonds no later than today. "But so far we have not received any interest on our bonds," explains Metzler. He adds, "With banks in Hong Kong closing today, it's certain that these bonds have defaulted."


(Note to editors: Exact details of the bonds that have defaulted so far can be found in the appendix to this press release.)


Particularly problematic for Evergrande: all 23 outstanding bonds have a cross-default clause. "This means that if a single one of these bonds defaults, all 23 outstanding bonds automatically have 'default' status" DMSA senior analyst Metzler knows. However, this does not automatically result in a bankruptcy for Evergrande Group. To determine bankruptcy, a insolvency petition must be filed with the court. This can be done either by the company itself or by one or more of the company's creditors. And this is precisely what is now planned. Metzler: "DMSA is preparing bankruptcy proceedings against Evergrande. We are already holding talks with other investors in this regard. We would be pleased if other investors were to join our action group."


For the DMSA expert, it is clear: "As soon as a court opens insolvency proceedings, Evergrande will also be officially bankrupt - and that is only a matter of days."

 

[Realistic Elephant]

I guess I should state the obvious - the CPC is going to nominally bail out Evergrande Group, but they are not going to continue to exist as a private company in any way, shape or form.

 

[Tasty Tatty]

Timely for the next 'dark winter'. Brace for impact ladies and gents.

Makes me think that all of that "don't eat meat!" narrative was in preparation for this rather than so-called climate change. After all, there is no way they didn't know this was going to happen. They always know. And they won't change their lives in case of global disaster.

 

[Realistic Elephant]

I’m an absolute exceptional individual but I missed the Tesla train, the Ethereum train, and I missed the Bitcoin train. How do I profit off this, are there any specific stocks or mutual funds/ETFs?

Honestly, I'd just stay away from anything that speculative unless you have incredible emotional discipline, a significant personal line of credit and time to research the crypto market, or have no fucks left to give. That sphere is a rollercoaster.

 

[Splinters RCVD ✞]

I guess I should state the obvious - the CPC is going to nominally bail out Evergrande Group, but they are not going to continue to exist as a private company in any way, shape or form.

So, will everything Evergrande has, employees, operations, equipment, etc remain, just in CCP ownership, or in the hands of an even bigger corporation?

Makes me think that all of that "don't eat meat!" narrative was in preparation for this rather than so-called climate change. After all, there is no way they didn't know this was going to happen. They always know. And they won't change their lives in case of global disaster.

A stifled or absent protein income is very bad for muscle, definitely not good if people are ever forced to get physical. 'They' know it all of course, its all a devilish puppet show with the sheeple enabling it.

 

[Realistic Elephant]

So, will everything Evergrande has, employees, operations, equipment, etc remain, just in CCP ownership, or in the hands of an even bigger corporation?

My guess is it will become a SOE charged with building affordable housing to support Xi's renewed socialist push. It will possibly be vertically integrated with companies further back in the supply chain that will fail due to Evergrande (e.g. cement/drywall/structural steel manufacturers, elevator manufacturers, asphalt plants and so on)

 

[Lord Neeba]

It's not so much the economy as it is the life savings of some 20% the [former] Chinese middle class. Of course, it affects a lot of businesses too, but this is the death of the middle class writ large.

Edit: By the time the downstream effects are finished, they'll have to restructure the entire economy to stave off revolt. Get ready for The Great Reset redistribution!

My guess is that the Chinese government will bailout the middle class investors, but let the corporate big wigs swing on the vine. It would maintain the CCP's support among the common man while telling the movers and shakers in other Chinese companies to not expect to be saved if they violate CCP regulations.

 

[FlappyBat]

My guess is that the Chinese government will bailout the middle class investors, but let the corporate big wigs swing on the vine. It would maintain the CCP's support among the common man while telling the movers and shakers in other Chinese companies to not expect to be saved if they violate CCP regulations.

Man, why you gotta make the CCP sound based.

 

[Drkinferno72]

Chyna btfo moment?

 

[A Cardboard Box]

You honestly believe the CPI is measuring true inflation? It's been so massaged since 1990 it's basically a way to cut down on COLA costs for SS recipients....for a while it was realistic but has totally broken away from real-world inflation since 2008 or so and has only gotten worse since then.

I'm open to having my mind changed, however I personally haven't read anything conclusive staying that CSI is counterfactual.

 

[Realistic Elephant]

I'm open to having my mind changed, however I personally haven't read anything conclusive staying that CSI is counterfactual.

Shadow Government Statistics - Home Page

www.shadowstats.com

Take a browse, although I disagree with him on GDP and inflation. The Billion Prices Project diverged from government inflation stats in 2012 as well.

 

[Ser Prize]

Would be nice if this puts a serious crunch on China's toothpick-and-glue economy, but I won't hold my breath. Besides, them going down could possibly result in some economic pains here at home that would really leave the USA hurting more than it currently is.

Why do you think Chinese "Citizens" have been buying up so much American land?

 

[Another Sperg on the Net]

Why do you think Chinese "Citizens" have been buying up so much American land?

Fuck all good it does them when they aren't allowed to leave Xi Ji Ping's Neo Maoist paradise now will it.

 

[Splinters RCVD ✞]

Fuck all good it does them when they aren't allowed to leave Xi Ji Ping's Neo Maoist paradise now will it.

Xi might be the ringleader in that bunch, but his subordinates are powerful themselves as well. If the majority of them decided to flee and he would try to stop them, they could just pool their wealth and assets and eat him for breakfast.

 

[BelUwUga]

I’m an absolute exceptional individual but I missed the Tesla train, the Ethereum train, and I missed the Bitcoin train. How do I profit off this, are there any specific stocks or mutual funds/ETFs?

You should see a lot of your "safe" investments in a diversified portfolio go up in value, particularly anything with low-friction trade to China. The default and resultant volatility is already priced into the market if we are reading about it here. Putting up cash now is pretty much volunteering to hold the bag. There's also the risk that China will come in and void debts held by foreign owners and/or simply appropriate it. It happens all the time in non-keystone businesses over there. The Chinese government gives less of a fuck about you than they do their average citizen. Safe bet is to join the rest of the world in raffing from the sidelines.

 

[elite_club]

Yep. Evergrande is the first domino, now we get to see how many other dominoes are piled up behind it. BlackRock and UBS Group AG (a Swiss bank) are significant bagholders, or at least were the last time they told anyone about their assets.

Lots of bugmen over in China are going to be fucked by this development, at least at first. As @pwnest injun pointed out, they're already struggling to keep the lights on these days, and now they're faced with generations of their family's wealth evaporating before their eyes (unless Xi steps in to cover costs, which is probably likely). In the meantime, there will be chaos. There were plenty of other real estate groups missing bond repayments lately, so it makes one wonder whether there's any actual intrinsic value in China's property markets at all, or if it's just the Chinese jewing each other for the last 50 years (smart money is pointing to that second one).

For anyone who's not a chink NPC though, you probably don't have too much to worry about from this. Unless you want to profit, in which case watch very carefully to see how the contagion spreads and react accordingly and you'll be laughing all the way to the bank.

Listen, I'm Sofa King We Todd Edd, so I'm going to need you to spell it out to me. Can you provide an example of how one could leverage this and its consequences into profit through investments?

 

[Baroque]

The comments about an Evergarde collapse being fundamentally different from a Lehman brothers or whatever are correct, and the effects SHOULD be limited, but who knows.

Spoiler: Evergrande dodges default again; property sector debt concerns linger

November 11, 20214:22 AM CSTLast Updated an hour ago
Business
Evergrande dodges default again; property sector debt concerns linger
By Anshuman Daga and Clare Jim, Andrew Galbraith

4 minute read

Summary

Bondholders receive overdue coupon payments - source
Chinese property shares, bonds stage relief rally
Broader liquidity concerns remain, more debts coming due
SINGAPORE/HONG KONG, Nov 11 (Reuters) - Cash-strapped developer China Evergrande Group once again averted a destabilising default at the last minute, with a source on Thursday saying several bondholders had received overdue coupon payments.

Evergrande (3333.HK), the world's most indebted developer, has been stumbling from deadline to deadline in recent weeks as it grapples with more than $300 billion in liabilities, $19 billion of which are dollar bonds.

Chinese media outlet Cailianshe reported several bondholders had received interest payments of the three bond tranches that had a total of more than $148 million due last month. , ,

The payments were made at the end of a 30-day grace period that ended Wednesday, and were the third reprieve for the company in the past month. Two separate offshore coupon payments that were due in late September and for which the grace periods ended in late October were also paid with the deadline perilously close.

A failure to pay would have resulted in a formal default by the company and triggered cross-default provisions for other Evergrande dollar bonds, exacerbating a debt crisis looming over the world's second-largest economy.

"The near-term fix seems to be happening but there's a long way to go before this issue gets sorted out. These are early days," said the source with knowledge of the matter, referring to Evergrande and declining to be named without authorisation to talk to the media.

Evergrande, which is at the centre of a deepening liquidity squeeze in China's $5 trillion property sector, did not respond to Reuters request for comment on its latest bond coupon payment.

Although the developer managed to avoid a default again, woes in the property sector showed no signs of abating with a wall of debt coming due.

Evergrande has coupon payments totalling more than $255 million due on Dec. 28. It has come under pressure from its other creditors at home and a stifling funding squeeze has cast a shadow over hundreds of its residential projects.

Investor focus is now also shifting to other cash-strapped developers which have a string of offshore payments coming due in the short term, including Kaisa Group (1638.HK).

Kaisa has the most offshore debt of any Chinese developer after Evergrande and pleaded for help from creditors this week. It has coupon payments totalling over $59 million due on Thursday and Friday, with 30-day grace periods for both.

It was not immediately known if Kaisa, which became China's first property company to default on an overseas bond in 2015, has made payment for the tranche due on Thursday. It has already missed payments on some wealth management products at home.

The developer did not immediately respond to Reuters request for comment.

HARD LANDING

While the U.S. Federal Reserve this week warned China's troubled property sector could pose global risks, there were no clear indications whether Beijing will step in with a broader, national plan to tackle the issue.

Chinese regulators have in recent weeks, however, sought to reassure investors and homebuyers, saying risks were controllable and excessive credit tightening by banks was being corrected.

Regulators and government think tanks have also held meetings with developers in the past few weeks, and the market is expecting some easing in credit and housing policies to prevent a hard landing of the sector.

Those hopes and Evergrande's payment sparked a relief rally across Chinese property shares, with an index of real estate A-shares (.CSI000952) surging 9%, and Hong Kong's Hang Seng Mainland Properties Index (.HSMPI) closing up 5.6%.

Shares of Evergrande closed up 6.8% to a two-week high.

Chinese developers' bond prices, which have been hit hard in recent weeks, soared even higher.

Duration Finance data showed the price on China Aoyuan Group's (3883.HK) 5.88% March 2027 bond jumping more 30% on the day, although it continued to trade at deeply distressed levels of around 36 cents in the dollar.

Evergrande's April 2022 notes jumped 4% from midnight to 28.886 cents on the dollar in the afternoon, yielding 620%, though still off from the 30.289 earlier this week, according to Duration Finance data.

The developer's bond due March 2024 traded at 24.839, up from 23.692 on Wednesday, the data showed.

Bonds issued by Times China Holdings (1233.HK) Xinyuan Real Estate (XIN.N), Yuzhou Group Holdings (1628.HK) and Sunac China Holdings (1918.HK) also rose more than 10%.

An index of dollar-denominated Asian high-yield bonds (AHYG.SI) rose more than 1%, while Chinese high-yield corporate dollar spreads (.MERACYC) narrowed from record highs.

Developers including Evergrande and Kaisa have also been looking to sell some of their business assets in China and elsewhere to raise cash amid rapidly growing repayment obligations.

Also, did anyone see that the article was written by the "DMSA" firm that is quoted throughout? This was at the top of OP's link:

NEWS PROVIDED BY

DMSA Deutsche Markt Screening Agentur GmbH
Nov 10, 2021, 11:12 ET

 

[Knight of the Rope]

I’m an absolute exceptional individual but I missed the Tesla train, the Ethereum train, and I missed the Bitcoin train. How do I profit off this, are there any specific stocks or mutual funds/ETFs?

/biz/-tier answer: go all-in on OTM calls on $LAC at the $50.00 strike price. Thank me later.

Kiwi Farms-certified Financial Advisor (#financialadvice) answer: Honestly it depends on what happens the next couple of weeks, and according to your own risk preference. If we get a bunch more Chinese real estate companies defaulting in the coming days then you'll want to start watching real estate prices and interest rates here at home, too. If the damage turns out to be worse than we thought and it turns out that a large number of western investment firms were in bed with China, then shit's going into freefall and who the hell knows what's going to happen. If you're confident and lucky you can make a killing shorting (after some due diligence, of course), but honestly the safer and still-reasonably-lucrative play would be to weather it and buy up blue chips while they're at fire-sale prices.

(And conversely, if this turns out to be a nothingburger because Xi bails out his bugchildren and pays them back all their lost investments, then all of a sudden the Chinese are going to need a whole lot of metal to finish of Evergrande's The People's apartment complexes and stuff that Evergrande never got around to finishing. So expect demand to rise for iron, steel and raw materials, particularly here in the US since the Chinese are still in their gay spat with Australia who they'd usually be buying this shit from.)

Long-term, it's a safe bet to expect that shit is going to get pretty tough for mainland chinks for the foreseeable future. I'm only half-joking about being bullish on $LAC: we're all eyeing Lithium and other energy producers on the bet that it won't be long before a bunch of mainland bugmen (that can't power their idioticly strictly-Australian-grade-coal power plants because mom and dad are still fighting) come looking for quick, cheap, and TSPP solutions for their denizens' power woes.

So there you have it: certified financial advice from some random Internet stranger on a retard gossip site. You can trust me.

 

[Splinters RCVD ✞]

Eh. Could this turn out to be an overhyped slapfight among CCP moneybags? That would be anticlimactic, but also less trouble for us common mortals.

 

[CWCissey]

A significant enough injury to Chinese middle class ambitions could cause political unrest. The CCP might do something provocative to distract from it.

Taiwan is too obvious and too big, I'm saying more Uighyr purging, giving Hong Kong another slap or they'll wave their tiny yellow dicks at India again.

 

[pwnest injun]

Eh. Could this turn out to be an overhyped slapfight among CCP moneybags? That would be anticlimactic, but also less trouble for us common mortals.

My understanding of Chinese leadership atm is that they have decided to scrap the liberal consumerist culture they were attempting to build. So whatever they do here will serve that end. They want people hungry, but not starving. They want people reliant, not comfortable. So, my bet is on the evaporation of generational wealth and a redistribution of all of those 90% finished homes that people have been sitting on for investment purposes.