Investors around the world brace for a great fall in China
LONDON — International investors that have been piling into China in recent years are now bracing for one of its great falls as the troubles of over-indebted property giant China Evergrande come to a head.
The developer’s woes have been snowballing since May. Dwindling resources set against 2 trillion yuan (US$305 billion) of liabilities have wiped nearly 80 per cent off its stock and bond prices and an US$80 million bond coupon payment now looms next week.
What happens then is unclear. Bankers have said it will most likely miss the payment and go into a kind of suspended animation where authorities step in and sell some of its assets, but it could easily get messy.
“We will have to see what happens,” said Sid Dahiya, head of EM corporate bonds at abrdn, formerly Aberdeen Standard, in London, which holds a small sliver of the bonds.
“They are probably working on a deal in the background, but we don’t have any clarity and we don’t really have any precedents, so it is uncharted water.”