Evergrande – Seen this movie before?

Evergrande – Seen this movie before?

by Readers Question

Guest Author

10:04 AM, 13th December 2021, About 3 years ago 6

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Hui Ka Yan is a Chinese billionaire who owns Evergrande (a Cayman Islands company)

As we know, Evergrande has enormous debts but, of course, the Chinese government have an enormous holding of US Treasury Bonds.

In the end, the Chinese government will intervene eat Mr Yan’s lunch and buy foreign banks debt at a discount and implement the apartments into local government housing and move on.

In the meantime, a whole load of bankers will have their Xmas ruined.

How do we know ?

We have seen this movie before.


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11:17 AM, 13th December 2021, About 3 years ago

Are you suggesting that Evergrande is another collateralised-debt-sub-prime-mortgage crisis waiting to happen, like Lehman Brothers? And if so, why will the bankers have their Xmas ruined?

david porter

11:23 AM, 13th December 2021, About 3 years ago

it is in the article
"buy foreign banks debt at a discount "


12:37 PM, 13th December 2021, About 3 years ago

Reply to the comment left by david porter at 13/12/2021 - 11:23
How do you buy a "debt at discount"... if Evergrande owes £10 to bank X, then if the government "buys" that debt, the government ends up owing £10 to bank X. The government could pay bank X £5 to write off the £10 debt, but why would the Chinese government bail out a foreign bank in that way?

david porter

13:44 PM, 13th December 2021, About 3 years ago

for smartermind
Mythical over leveraged property company has issues. If it had more equity it would not be in trouble.
The government intervenes and buys it’s assets for a song. They have acquired an enormous number of flats for well below cost. The original investor has a few pennies in his hand. The foreign banks have a wagon load of distressed debt which they will sell for ef all.
Government rents the luxury flats to its poor people for a good r.o.i,
Wins the next election by a landslide.
Great deal for Government
Harvard and Insead educated banker who commutes from a white glove apartment in the upper east side to Wall street sells up the debt and does not need to go to China for more than a few weeks. The shareholder will take a hit but he moves on to Goldman or somebody anyway!


8:41 AM, 18th December 2021, About 3 years ago

Evergrande us funded by shadow banks and not banks. Overseas dollar bondholders do have foreign investors but the majority are Chinese investors and Banks., However unlike the US banks Chinese banks are not under capitalised. The Chinese government can instruct Chinese banks to lend , At present, the debts are being serviced by Hui Ka Yan is paying the interest himself.. The people that will be affected most are the Chinese shareholders. It is doubtful whether the 2 million people who have purchased unfinished apartments will lose as local provincial governments will step in and complete the projects.
In the end, after a few years, Evergrande will be restructured and Bondholders will receive around 25% of their initial money. though even that will take longer. The difference is that ordinary people will not lose out while the greedy will get a hit.

david porter

9:53 AM, 18th December 2021, About 3 years ago

Thank you for your news. There is not a big difference between our point of views. I am concerned about the Chinese banks since they abolished the Reserve Requirements. Secondly they have large amount of investors money which is off balance sheet in wealth management funds.
The balance sheets may well appear healthy but off balance sheet activity may cause other symptoms. We simply cannot tell. Look at what happened to Greece with off balance sheet items.

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