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  China Evergrande Group received a liquidation order from a Hong Kong court, setting off what’s likely to be a daunting process to carve up one of the biggest victims of a years-long and nationwide property debt crisis. Judge Linda Chan said in the city’s High Court on Monday morning. Trading in Evergrande shares was suspended after the stock tumbled 21% Bloomberg 29 januari 2024 https://www.bloomberg.com/news/articles/2024-01-29/china-evergrande-receives-winding-up-order-from-hong-kong-court Domstol: Evergrande ska likvideras SvD/TT 29 januari 2024 https://www.svd.se/a/zEnnOO/domstol-evergrande-ska-likvideras Evergrande Liquidation Is a Big Test for International Creditors https://www.bloomberg.com/news/articles/2024-01-29/evergrande-liquidation-is-a-big-test-for-international-creditors

 What kind of a moment will the Evergrande Moment be?  Will it be a Minsky Moment, akin to the Lehman collapse?  Or will it be more akin to the LTCM Moment? John Authers Bloomberg 20 september 2021 https://www.bloomberg.com/opinion/articles/2021-09-20/china-s-evergrande-moment-is-looking-more-ltcm-than-minsky Interest payments on two Evergrande notes come due Thursday, a key test of whether the developer will continue meeting obligations to bondholders even as it falls behind on payments to banks, suppliers and holders of onshore investment products. Investors are pricing in a high likelihood of default, with one of the notes trading at less than 30% of face value. Bloomberg 19 september 2021 https://www.bloomberg.com/news/articles/2021-09-18/evergrande-moment-of-truth-arrives-with-bond-payment-deadlines The Big Short Michael Burry Warns China’s Evergrande Debt Crisis Potential Meltdown! The Money GPS  19 sep. 2021 https://www.youtube.com/watch?v=RdAelRzn_PQ The Bigg...

 Founder Hui Ka Yan is given lifetime ban by Chinese markets panel The China Securities Regulatory Commission found Hengda had substantially inflated crucial reported financials in 2019 and 2020, and relied on those misleading figures to sell bonds.  It judges sales were overstated by a total of 564.1 billion yuan over the two years, or the equivalent of $78.4 billion.  Rebecca Feng Bloomberg 18 March 2024 https://www.wsj.com/finance/regulation/china-evergrande-fraudulently-boosted-sales-regulator-says-356eaee4 Evergrande of $78 Billion Fraud Among Worst Ever Evergrande’s alleged fraud dwarfs that of Luckin Coffee and Enron. Blooomberg 19 March 2024 https://www.bloomberg.com/news/articles/2024-03-19/china-accuses-evergrande-of-78-billion-fraud-among-worst-ever China Evergrande Group received a liquidation order from a Hong Kong court Bloomberg 29 January 2024 https://englundmacro.blogspot.com/2024/01/evergrande-heads-to-liquidation.html How the World’s Priciest Property M...

... the latest milestone in months-long financial drama that paves the way for a massive restructuring of the world’s most indebted developer. Fitch Ratings cut the developer to restricted default over its failure to meet two coupon payments after a grace period expired on Monday Beijing’s reluctance to bail out Evergrande sends a clear signal that the Communist Party won’t tolerate massive debt build-ups that threaten financial stability.  Bloomberg 9 december 2021 https://www.bloomberg.com/news/articles/2021-12-09/evergrande-defaults-for-first-time-as-china-debt-strains-spread ‘The risk caused by a few real-estate firms in the short run would not undermine the market for the medium and the long run,’ said Yi Gang, governor of the People’s Bank of China.  “Companies issuing bonds overseas and their shareholders will be urged to properly handle their debt issues and meet their debt obligation in accordance with law and market principles,” he said. “This is a market event. It s...

motsvarande drygt 2 600 miljarder kronor. SvD 14 september 2021 https://www.svd.se/krisjatten-stormades--kraver-pengarna-tillbaka China's major banks have been notified that Evergrande won't be able to pay loan interest due Sept. 20 HONG KONG, Sept 15 (Reuters)  https://www.reuters.com/business/fitch-says-possible-china-evergrande-default-may-have-broader-effects-2021-09-15/ What Is China Evergrande and Why Is It In Trouble? Bloomberg 13 september 2021 https://www.bloomberg.com/news/articles/2021-09-13/what-is-china-evergrande-and-why-is-it-in-trouble-quicktake

 deepening the pressure on the group that has just days to avoid an official default on its debt.  FT 20 October 2021 https://www.ft.com/content/63bfa855-4756-40fb-90ce-03e773d5b45b Credit Suisse, once the top international underwriter of Evergrande bonds, sold down its entire exposure to the troubled Chinese property developer late last year FT SEPTEMBER 24 2021 https://www.ft.com/content/490c34fd-bc22-47b3-9e1c-b33caf826ece China Evergrande Calls Off Plans to Sell Key Unit for $2.6 Billion WSJ 20 October 2021 https://www.wsj.com/articles/china-evergrande-calls-off-plans-to-sell-key-unit-for-2-6-billion-11634743747 Den krisdrabbade kinesiska fastighetsutvecklaren Evergrande har ansökt om att handeln i  bolagets aktie ska återupptas på Hongkongbörsen i morgon den 21 oktober klockan 09.00 lokal tid.

Suppose that the conventional wisdom is right and that Evergrande isn’t another Lehman moment. That still won’t mean that things are OK Some of us still remember the Japanese bubble economy — or as the Japanese themselves called it, the “babaru economy” — of the late 1980s, when prices of many assets, above all commercial real estate, went completely crazy.  At one point it was widely claimed that the land under the Imperial Palace was worth more than the whole state of California.  Then everything crashed. The bursting of the Japanese bubble didn’t lead to a financial meltdown. But it was followed by a prolonged period of economic weakness Paul Krugman NYT 24 September 2021 https://www.nytimes.com/2021/09/24/opinion/china-evergrande-japan.html Evergrande - China will almost certainly avert a Minsky crisis, but... Ambrose Evans-Pritchard Telegraph 22 September 2021 https://englundmacro.blogspot.com/2021/09/evergrande-china-will-almost-certainly.html

Domino 2: Companies Similar to Evergrande.  A significant number of companies are borrowing above 20% rates and can no longer fund from the dollar funding market.  These companies can either default, they can try to sell assets, they can go to government banks to borrow money (but this route is currently closed until January) or they can go to the government. Today there are 35 “significant” companies, as per the strategist’s definition, and 13 are saying in the dollar funding market that they should not be refinanced.  This is like the sub-prime equivalent; one has gone down, and the others are feeling the knock-on effect. These companies are 12.5% of the current market cap of the property sector. The amount of market cap that has been lost is $250 billion and including Evergrande is $500 billion to give some scale of numbers.   Domino 3: Minsheng Bank.  In 2008, Bear Stearns imploded due to subprime debt.  Citigroup is watching Minsheng Bank, which h...

 “The firm has lost the capacity to sell new homes, which means its main business model is effectively defunct. This makes full repayment of its debts unlikely,” the analysts said. CNBC NOV 18 2021 https://www.cnbc.com/2021/11/18/china-evergrande-default-is-highly-likely-sp-says.html Evergrande shares slip ell 5.7% after deal to raise $273 million https://www.cnbc.com/2021/11/18/evergrande-shares-slip-after-striking-a-deal-to-raise-273-million.html

China’s finance ministry and securities regulator imposed record fines and a six-month suspension on PricewaterhouseCoopers’s operation in the country over its audits of China Evergrande the real-estate developer whose collapse in late 2021 jump-started the country’s property crisis. The $62 million in fines, handed down by regulators on Friday, was the country’s largest-ever penalty imposed on a Big Four accounting firm. It is also the first major penalty levied against an auditor related to China’s real-estate collapse Rebecca Feng Wall Street Journal 13 September 2024 https://www.wsj.com/finance/china-fines-pwc-over-evergrandes-onshore-unit-faba21db Domstol: Evergrande ska likvideras SvD/TT 29 januari 2024 https://englundmacro.blogspot.com/2024/01/evergrande-heads-to-liquidation.html

 but directed them to issue credit to less indebted property groups in an effort to relieve the pressure on the real estate sector.  The industry is estimated to account for about one-third of total economic output in the country. Chinese creditors sue Evergrande for claims totalling $13bn  “There is no way we can repay so many creditors with our limited resources,” said an Evergrande executive, who asked not to be identified. “We will let judges decide who gets paid and how much.” Evergrande has also issued offshore bonds totalling $19bn. FT 16 December 2021 https://www.ft.com/content/941c0e96-ebf1-42ee-97ec-ad6764f35cbf

The big wigs in the Chinese Communist Party look on the financial crisis as ultimate proof western capitalism is a flawed construct. They are hardly going to allow anything that looks like a repeat on home soil. As Leo Tolstoy didn’t write, all bull markets are alike; each financial crisis is unhappy in its own way. The working assumption is that Chinese authorities will follow the LTCM playbook in dealing with Evergrande. Federal Reserve Bank of New York got the big banks in a room, knocked some heads together and organised a bailout.  Ben Wright Telegraph 21 September 2021 https://www.telegraph.co.uk/business/2021/09/21/evergrande-not-chinas-lehman-moment-still-scary/    If the government is stepping in, there is no particular reason to assume that the ordinary claims of seniority will apply.  If the government steps in to rescue small investors or the banking system or housing prices, that doesn’t necessarily mean it will also rescue foreign hedge funds.  Muc...

A major mistake of the Cold War was the tendency of Western observers to overestimate the Soviet Union. I have often wondered if the same mistake is being repeated with the People’s Republic of China. Evergrande is just one of many such leveraged real estate companies in China. But at some point soon — probably before the October holiday — the government will force through a formal restructuring and bankruptcy process. Those considered politically important will get off lightly; the politically disposable will lose their shirts; a few top executives will face jail. China’s growth has been boosted for many years by the construction of an excess supply of housing units. This has been financed by an unsustainable mountain of debt.  Niall Ferguson Bloomberg 26 september 2021  https://www.bloomberg.com/opinion/articles/2021-09-26/niall-ferguson-evergrande-is-a-victim-of-xi-jinping-s-china-crisis China’s Property Sector Will Muddle Through Rest of Year https://macropolo.org/china-pr...

for new bonds, blaming a shutdown of its usual financing channels for the cash crunch. Last week, the heavily indebted China Evergrande avoided default for a second time by making an overdue interest payment on dollar bonds WSJ 1 November 2021 https://www.wsj.com/articles/chinese-developer-yango-group-proposes-bond-swap-to-avoid-imminent-default-11635760688 Yango shares fell as much as 9% Monday in Shenzhen, hitting a seven-year low. Several of its onshore bonds plunged to record lows, prompting trading halts.  https://www.bloomberg.com/news/articles/2021-11-01/china-developer-yango-tries-to-avert-default-with-bond-exchange How an Evergrande Collapse Would Cascade The key to managing the crisis is not just to contain the risk of the financial loans, but also the other two-thirds of the liabilities owed by the distressed real estate developer to a vast network of companies and enterprises in its supply chain — including providers of construction services and material as well as cont...

Regulators want Evergrande to save itself by raising cash and cutting its debts https://www.economist.com/finance-and-economics/2020/10/03/is-chinas-biggest-property-developer-truly-too-big-to-fail Hui’s China Evergrande Group sealed a deal last week with a group of investors that waived their right to force a $13 billion repayment by the property firm, avoiding a potential default that would have sent shock waves across financial markets in China and beyond. https://www.bloomberg.com/news/articles/2020-10-03/how-evergrande-s-billionaire-founder-skirted-his-latest-crisis

The nation’s deepening property-market slump, a $7 trillion stock rout and a tepid policy response are all weighing on broader sentiment.  The fact that the bulk of the company’s assets are either already seized or located not in Hong Kong but mainland China — potentially out of reach of bondholders  Bloomberg 8 February 2024 https://www.bloomberg.com/news/articles/2024-02-08/a-99-bond-wipeout-hands-hedge-funds-a-harsh-lesson-on-china Evergrande Heads to Liquidation https://englundmacro.blogspot.com/2024/01/evergrande-heads-to-liquidation.html

Some investors feared that China Evergrande Group would collapse spectacularly, triggering losses far and wide.  Instead, the Chinese state is dismantling the giant developer slowly and behind the scenes, in what amounts to one of the biggest financial challenges Beijing has faced in years. WSJ 10 November 2021 https://www.wsj.com/articles/evergrande-china-crisis-real-estate-developers-11636552507

When Evergrande’s auditor, PricewaterhouseCoopers in Hong Kong, signed off on the company’s 2020 financial statements, it didn’t include a so-called going concern warning.  These red flags from an auditor show that it has doubts about the company’s ability to stay afloat for at least 12 months. A PwC spokesman declined to comment. WSJ 24 September 2021 https://www.wsj.com/articles/china-evergrande-never-got-auditor-warning-despite-big-debt-load-11632475800

  In the event of a liquidation, Vanke’s dollar bondholders are staring at a recovery rate in the teens, as the issuer is not the onshore parent but a wholly-owned subsidiary with limited assets. Offshore creditors holding $5.4 billion of unsecured bank loans and bonds will have to fight over $950 million worth of assets, giving them an average recovery rate of only 18%. Bloomberg December 4, 2025 https://www.bloomberg.com/opinion/articles/2025-12-04/china-vanke-s-endgame-the-bad-and-the-very-ugly   Den kinesiska fastighetsgiganten Evergrande Group har skulder på 305 miljarder dollar https://englundmacro.blogspot.com/2021/09/den-kinesiska-fastighetsgiganten.html Evergrande Heads to Liquidation januari 2024 https://englundmacro.blogspot.com/2024/01/evergrande-heads-to-liquidation.html  

  Poetry in ocean: Hong Kong from the water  https://englundmacro.blogspot.com/2025/03/poetry-in-ocean-hong-kong-from-water.html Article 23 is final confirmation of China’s shocking breach of faith with Britain. Beijing solemnly pledged, 40 years ago, to respect Hong Kong’s autonomy.  https://englundmacro.blogspot.com/2024/03/china-seals-hong-kongs-failed-state-fate.html See inside a 155 mph sleeper train  connecting Hong Kong and Beijing America innovates, China replicates, Europe regulates  https://englundmacro.blogspot.com/2024/12/rolfs-lanktips-9-december-2024.html Hong Kong Property Woes Persist A vital financial lifeline secured by one of Hong Kong’s biggest property developers has helped prevent the city from facing an Evergrande-style downfall — for now. New World Development, a major residential and commercial property firm controlled by one of Hong Kong’s wealthiest families, completed an HK$88.2 billion ($11.2 billion) loan refinancing on Monday, the large...