- Joined
- Jul 18, 2017
Evergrande is the second largest of China's real estate companies, with assets estimated to be worth 2.3 trillion Chinese Yuan, or 147 billion US dollars. Now consider the following. Evergrande is in debt in excess of 300 billion US dollars. Worse, those debts were issued at eye watering Interests rates in excess of 13%. As property markets are one of the few places in the Chinese economy individual retail investors can park their money a huge number of Chinese citizens and banks have exposure to the securities issued on Evergrandes debt.
And Evergrande is now Bankrupt, unable to service the interest on its debts let alone repay them. Worse, as their balance sheet started to bleed red ink, they all but forced their own employees to start buying up the debts out of their own pocket. Promising healthy interest rates as they went. Those debts are now worthless and all employees of the company are now on strike. Riots have broken out and the Chinese Communist party is promising the harshest punishments for the executives.
Meanwhile, financial markets around the world are routing as the contagion spreads. Nobody knows how much exposure the Chinese Banks have to this, nor what exposure the Western Banks have to it. It is assumed though that everyone is caught up in this, and depending on how the Evergrande Debt was structured, we are looking at a meltdown on par with Lehman Brothers.
www.latimes.com
And Evergrande is now Bankrupt, unable to service the interest on its debts let alone repay them. Worse, as their balance sheet started to bleed red ink, they all but forced their own employees to start buying up the debts out of their own pocket. Promising healthy interest rates as they went. Those debts are now worthless and all employees of the company are now on strike. Riots have broken out and the Chinese Communist party is promising the harshest punishments for the executives.
Meanwhile, financial markets around the world are routing as the contagion spreads. Nobody knows how much exposure the Chinese Banks have to this, nor what exposure the Western Banks have to it. It is assumed though that everyone is caught up in this, and depending on how the Evergrande Debt was structured, we are looking at a meltdown on par with Lehman Brothers.
As China's property giant Evergrande veers toward collapse, its unpaid debts spark protests
China Evergrande is struggling with more than $300 billion in debt. At its Shenzhen headquarters, angry suppliers and investors demand overdue pay.
