China's Central Bank: "We Can Contain the Evergrande Risk"
Oct 20, 2021 1:04:48 GMT -5
Post by Berean on Oct 20, 2021 1:04:48 GMT -5
“Overall We Can Contain the Evergrande Risk” Says China’s Central Bank But What About Other Companies, Banks and Government Risks?
By Joe Hoft
Published October 19, 2021 at 5:55pm
The Evergrande solvency crisis in China continues as well as solvency issues with other companies, banks, and local governments. Nothing has changed.
MSN Money reported earlier today:
The Evergrande Group found its plan to sell a majority stake in its property services unit to Hopson Development delayed after failing to gain approval from the Guangdong provincial government overseeing the company’s restructuring, according to Reuters.
This keeps Evergrande, the world’s most indebted property developer, facing dues of over $300 billion, away from the $2.6 billion it would have earned from the deal in wake of a Saturday deadline on the 30-day grace period following its missed bond payment in September.
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Along with this shelved deal, China saw its real estate sector take further hits. Sinic Holdings declared default and Kaisa Group saw its credit rating downgraded. This follows announcements that China Properties Group defaulted on a loan and that Fantasia could not make recent payments, along with other companies facing credit rating drops.
Despite the recent sequence of events, the People’s Bank of China, the country’s central banking authority, told creditors to stay calm.
“Economic growth has been slowed down a little bit, but the trajectory of economic recovery remains unchanged,” Yi Gang, the bank’s governor, said on Saturday. “Overall, we can contain the Evergrande risk.”
China says they can contain the Evergrande risk but can they contain the risk of the other companies facing default, or the banks that hold trillions in off-balance sheet liabilities, or the off-balance liabilities of its local governments?
As noted above, Evergrande is the largest property management company in the world based on liabilities but there are other companies facing similar fates in China. It is five times the size of Lehman which was involved in the 2008 US property crisis.
Continued at link
By Joe Hoft
Published October 19, 2021 at 5:55pm
The Evergrande solvency crisis in China continues as well as solvency issues with other companies, banks, and local governments. Nothing has changed.
MSN Money reported earlier today:
The Evergrande Group found its plan to sell a majority stake in its property services unit to Hopson Development delayed after failing to gain approval from the Guangdong provincial government overseeing the company’s restructuring, according to Reuters.
This keeps Evergrande, the world’s most indebted property developer, facing dues of over $300 billion, away from the $2.6 billion it would have earned from the deal in wake of a Saturday deadline on the 30-day grace period following its missed bond payment in September.
TRENDING: Wow! President Trump Releases Statement on Colin Powell - Does Not Hold Back
Along with this shelved deal, China saw its real estate sector take further hits. Sinic Holdings declared default and Kaisa Group saw its credit rating downgraded. This follows announcements that China Properties Group defaulted on a loan and that Fantasia could not make recent payments, along with other companies facing credit rating drops.
Despite the recent sequence of events, the People’s Bank of China, the country’s central banking authority, told creditors to stay calm.
“Economic growth has been slowed down a little bit, but the trajectory of economic recovery remains unchanged,” Yi Gang, the bank’s governor, said on Saturday. “Overall, we can contain the Evergrande risk.”
China says they can contain the Evergrande risk but can they contain the risk of the other companies facing default, or the banks that hold trillions in off-balance sheet liabilities, or the off-balance liabilities of its local governments?
As noted above, Evergrande is the largest property management company in the world based on liabilities but there are other companies facing similar fates in China. It is five times the size of Lehman which was involved in the 2008 US property crisis.
Continued at link