{"id":139409,"date":"2021-09-21T23:32:32","date_gmt":"2021-09-21T23:32:32","guid":{"rendered":"https:\/\/precoinnews.com\/?p=139409"},"modified":"2021-09-21T23:32:32","modified_gmt":"2021-09-21T23:32:32","slug":"china-evergrande-inches-close-to-default-deadline-investors-wait","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/china-evergrande-inches-close-to-default-deadline-investors-wait\/","title":{"rendered":"China Evergrande inches close to default deadline, investors wait"},"content":{"rendered":"

NEW YORK\/HONG KONG (Reuters) – China Evergrande Group, once China\u2019s top-selling property developer, inched closer to a key deadline where it risks a default on its bonds, but world markets were calmer as investors and analysts played down the threat of its troubles becoming the country\u2019s \u201cLehman moment.\u201d<\/p>

FILE PHOTO: A vehicle drives past unfinished residential buildings at Evergrande Oasis, a housing complex developed by Evergrande Group, in Luoyang, China September 16, 2021. REUTERS\/Carlos Garcia Rawlins\/File Photo<\/figcaption>

While concerns about the spillover from a messy collapse roiled markets on Monday, U.S. stocks were flat on Tuesday. The U.S. dollar held relatively steady and the U.S.\u2019s corporate bond market steadied.<\/p>\n

\u201cThere\u2019s been a fair bit of concern about the possibility of contagion from the meltdown at Chinese property developer Evergrande,\u201d analysts at New York-based Bespoke wrote in a research note on Tuesday. \u201cBut so far that concern isn\u2019t showing up in parts of the credit markets that have served well as red flags for broader credit crunches in the past.\u201d<\/p>\n

A major test for Evergrande comes this week, with the firm due to pay $83.5 million in interest relating to its March 2022 bond on Thursday. It has another $47.5 million payment due on Sept. 29 for March 2024 notes.<\/p>\n

Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.<\/p>\n

Evergrande missed interest payments due Monday to at least two of its largest bank creditors, Bloomberg reported on Tuesday, citing people familiar with the matter. The missed payments had been expected as China\u2019s housing ministry had said that the company would be unable to pay on time, Bloomberg said.<\/p>\n

As investors and policymakers around the world tried to assess the potential fallout, Securities and Exchange Commission (SEC) chair Gary Gensler said the U.S. market is in a better position to absorb a potential global shock from a major company default than it was before the 2007-2009 financial crisis.<\/p>\n

Fed Chair Jerome Powell will likely be asked about the fallout from Evergrande when he speaks after the Fed\u2019s two-day meeting that wraps up on Wednesday at 2 p.m. ET. (1800 GMT).<\/p>\n

Despite the looming default, some funds have been increasing their positions in recent months. Fund giant BlackRock and investment banks HSBC and UBS have been among the largest buyers of Evergrande\u2019s debt, Morningstar data and a blog post showed.<\/p>\n

Other bondholders include UBS Asset Management and Amundi, Europe\u2019s largest asset manager.<\/p>\n

In any default scenario, Evergrande, teetering between a messy meltdown, a managed collapse or the less likely prospect of a bailout by Beijing, will need to restructure the bonds, but analysts expect a low recovery ratio for investors.<\/p>\n

S&P Global Ratings said on Monday it believed the Chinese government would only act in the event of a far-reaching contagion posing systemic risks to the economy.<\/p>\n

\u201cI would characterize Evergrande as a telegraphed and controlled detonation,\u201d said Samy Muaddi, the portfolio manager of the $5.1 billion T. Rowe Price Emerging Markets Bond fund, who does not have a position in the company.<\/p>\n

BNP Paribas estimated in a research note that less than $50 billion of Evergrande\u2019s $300 billion outstanding debt is financed by bank loans, suggesting the Chinese banking sector will have a sufficient buffer to absorb potential bad debts.<\/p>\n

Citigroup Inc subsidiaries serve as trustee and payment agent for a China Evergrande bond that matures in March 2022 and has $83.5 million in interest coming due on Thursday.<\/p>\n

\u201cWe do not have any direct lending exposure to Evergrande; our indirect exposure through counterparty credit risk is small and with no single significant concentration,\u201d Citigroup spokesperson Danielle Romero-Apsilos said in an email on Tuesday. She declined to comment on Evergrande\u2019s scheduled payments.<\/p>\n

In an effort to revive battered confidence in the firm, Evergrande Chairman Hui Ka Yuan said in a letter to staff that Evergrande will fulfil responsibilities to property buyers, investors, partners and financial institutions.<\/p>\n

Mainland China\u2019s stock and bond markets, foreign exchange and commodity futures markets, which were closed Monday and Tuesday for Mid-Autumn Festival, resume trade on Wednesday, but Hong Kong\u2019s financial markets will be closed for a public holiday.<\/p>\n

Evergrande\u2019s shares fell as much as 7% on Tuesday, having tumbled 10% in the previous day, on fears its $305 billion in debt could trigger widespread losses in China\u2019s financial system in the event of a collapse. The stock ended down 0.4%.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

NEW YORK\/HONG KONG (Reuters) – China Evergrande<\/p>\n","protected":false},"author":3,"featured_media":139408,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23051],"tags":[],"yoast_head":"\nChina Evergrande inches close to default deadline, investors wait - Pre Coin News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/precoinnews.com\/business\/china-evergrande-inches-close-to-default-deadline-investors-wait\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"China Evergrande inches close to default deadline, investors wait - Pre Coin News\" \/>\n<meta property=\"og:description\" content=\"NEW YORK\/HONG KONG (Reuters) – China Evergrande\" \/>\n<meta property=\"og:url\" content=\"https:\/\/precoinnews.com\/business\/china-evergrande-inches-close-to-default-deadline-investors-wait\/\" \/>\n<meta property=\"og:site_name\" content=\"Pre Coin News\" \/>\n<meta property=\"article:published_time\" content=\"2021-09-21T23:32:32+00:00\" \/>\n<meta name=\"author\" content=\"mediabest\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/precoinnews.com\/wp-content\/uploads\/2021\/09\/China-Evergrande-inches-close-to-default-deadline-investors-wait.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"mediabest\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/precoinnews.com\/business\/china-evergrande-inches-close-to-default-deadline-investors-wait\/\",\"url\":\"https:\/\/precoinnews.com\/business\/china-evergrande-inches-close-to-default-deadline-investors-wait\/\",\"name\":\"China Evergrande inches close to default deadline, investors wait - 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