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The growing worries at Evergrande have led to a $ 428bn Asian credit crunch, underscoring how China’s commodity crisis is spreading as more and more traders and investors prepare for the deadline to pay Thursday.
Yields on US dollar production rates offered by declining Asian borrowers have risen by about 12% this week, the highest rate since the first outbreak of the coronavirus, according to the Ice Data Services index.
More than 7% earlier this year came the merchants were furious There is a risk that Evergrande will miss out on the billions of debt it has on the global market.
Failure to repay interest rates due Thursday on one of the top dollar could trigger China repairing large debts. It also appears that the biggest surprise in the market was that foreign regulators were attracted by the lucrative returns as global yields were closer to history.
The Evergrande crisis has arisen slightly as a result of Beijing’s massive bankruptcy on borrowing by Chinese manufacturers, which offer the largest debt in Asia.
The steady pace of development represents a recent increase in the risks that global investors must face when trading the world’s largest market, after a year of turmoil that has already begun. barriers that have never existed in the fields of technology and education in this country.
“Right now, as far as I understand, maritime views, outside of China, including Hong Kong and the UK, are on the verge of a panic attack on China,” said Stephen Jen, London’s chief economist at Eurizon. “It is the end of all these amazing ways that have come to the market.”
A senior London official said he was bombarded with questions this week about Evergrande’s reputation.
The company, which has about $ 20bn in debt, is facing $ 83.5m in interest payments on Thursday. As recently as June, emerging market expert Ashmore had the highest chance of making a fortune of $ 63m, with some major investments starting in July. included UBS and HSBC. A group of foreign investors in Evergrande this month hired Kirkland & Ellis law firm and money bank Moelis to advise them on possible changes.
The five-year bond, which pays a fixed “coupon” of 8.25% and was issued in 2017 right Evergrande seat Hui Ka Yan selected as China’s richest man, best seller. It sells for 25 cents a dollar, which is a bit of a hit, compared to its average price in early June. If funds are scarce, Evergrande will have a 30-day period before a government error.
Wednesday, Evergrande said the Rmb232m ($ 35.9m) interest rate raised Thursday on a maritime loan had been “resolved through non-exchange negotiations”, but did not specify the time or amount of the investment.
The producer has been working for months to end the financial crisis but is struggling to raise enough money to reduce his debt by continuing to pay his creditors, creditors and retail sales that went down at its headquarters in Shenzhen last week.
As yields for Chinese exporters increased sharply in recent weeks with the ever-tight financial crisis at Evergrande, yields on the Ice index increased by 2 per cent this month alone. Real estate is 42% of the market, most of it is in China.
“There is a lot of pressure on these prices,” said Paul Lukaszewski, head of Asia-Pacific corporate debt at Aberdeen Standard Investments. He estimated that the prices available here would mean that about 30% of China’s largest suppliers voted B, a level that is considered risky, unlikely.
The overall Asian retail market has grown more than doubled from just $ 169bn in 2014, JPMorgan data has shown. Although most of the money comes from Asia, the global currency also contributes significantly to the market, which is one of the shortest ways to secure investments in China.
“Globalization has a lot to do with this work because it has a lot of potential,” said a bank in Hong Kong. He also noted that while Evergrande “has become a name that most people do not have”, some entrepreneurs “should be visible” because of their involvement in global outreach, demonstrations that performance also contributes.
Funds managed by HSBC and BlackRock bought Evergrande bonds in July and August respectively and increased their assets this year as their revenue grew.
While China is confiscation of property and houses has been characterized by Evergrande problems, stress has been increasing for many years. In 2018, the government said the money received from the overseas bank should be used to restructure existing debts instead of investing.
Fear of repayment has remained hit other developers and dollar bills, including the Fantasia Group, which was downgraded last week, and Guangzhou R&F. Failure to restructure could also lead to a financial crisis in China if the new homes were demolished.
In addition to the high yields that are offered, traders are also attracted to the Chinese economy because they think they have little connection to global markets. Lukaszewski said the demonstration of the largest harvest market in Asia was that “you only go to war, and that is what happens in your area”.
Jen added: “Living in London, just imagine what is happening in the US and everyone in China is scared of what is happening here… While American women are calm. Just think of the difference… Which party would be right?”
Additional reports of Attracta Mooney in London