What was supposed to happen is happening. The Chinese group Evergrande has not paid a maturing coupon since 83 million on a bond denominated in dollars that will have to be repaid in 2022. The flat day on the markets shows how much the formalization of the default is now taken for granted. Discounted the new slide of the shares of the real estate group that closed in – 11% on the bag of Hong Kong. The drop since the beginning of the year now exceeds 80%. In theory, the group, which has not yet made any claims on non-payment, still has a 30-day grace period before the rating agencies put the stamp on the bankruptcy. The suggestive, but deceptive, image of the “Chinese Lehman brothers” now seems to have been set aside.
Closer observers believe that the Beijing government will leave the group’s creditors with the match in hand but it will move later to stem the seismic waves on the market. They will be involved in this operation local Chinese authorities to which the central government has communicated to “get ready for the storm“. In recent days, bonds issued by Chinese companies with less solid balance sheets have recorded an increase in interest rates by more than that 10%.
Evergrande has total debts of over $ 300 billion (€ 256 billion). Of these approx 20 billion they consist of bonds placed on international markets. The group’s bonds are currently traded on the market at less than 30% of their par value. Yesterday the group announced that it had reached an agreement with the holders of a local currency bond. Next Wednesday the company is expected to pay a $ 45 million coupon on another stock.
In the evening, the president of the European Central Bank said: “We are monitoring” the Evergrande debt crisis but “in Europe and in the euro area in particular, thedirect exposure would be limited. Today I had a briefing because I think all financial markets are interconnected. I have very vivid memories of the latest stock market developments in China that have had an impact around the world – explained Lagarde – But in Europe and in the euro area in particular, direct exposure would be limited ”.
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