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Speaking of misleading headlines: https://www.nytimes.com/2021/11/10/business/evergrande-bond-deadline.html https://www.nytimes.com/2021/11/10/business/evergra

Speaking of misleading headlines: https://www.nytimes.com/2021/11/10/business/evergrande-bond-deadline.html https://www.nytimes.com/2021/11/10/business/evergrande-bond-... https://archive.md/cPsjv https://archive.md/cPsjv "China Evergrande meets a Wednesday payment deadline for two of its bonds." On multiple levels, too. "It was not immediately clear whether it had made payment on the third bond, which matures in 2024, or if all of the investors in the other two bonds had received payment." So basically they MIGHT have made payments on 2 of the 3 bonds. How is this being treated as anything other than a default? Is the financial press just afraid of upsetting China here?

deleted 5y ago
[deleted]
baybal2 5y ago
> Is the financial press just afraid of upsetting China here? BlackRock is the biggest foreign owner of Evergrande bonds. Next there are Vanguard, and a few other equally big Western funds. https://www.reuters.com/business/finance/blackrock-hsbc-among-largest-buyers-evergrande-debt-morningstar-2021-09-21/ https://www.reuters.com/business/finance/blackrock-hsbc-amon...
- adventured 5y ago
  Where does the article say that? It says: "BlackRock, HSBC among largest buyers of Evergrande debt" Those are relatively recent purchases and they were tiny re BlackRock - "BlackRock added 31.3 million notes of Evergrande's debt between January and August 2021, pushing its stake in the company to 1% of the assets in its $1.7 billion Asian High Yield Bond Fund, according to Morningstar." 1% of $1.7 billion, or $17 million. That's equal to 1/100th of 1% of BlackRock's assets. And they've got $9+ trillion under management. BlackRock has taken a hit on their equity in Evergrande, which is already largely toast: "The data also shows that BlackRock, the world’s largest asset manager, has suffered a $95.3m book loss on its Evergrande holding, which at the start of the year stood at just over $111m." https://www.fnlondon.com/articles/blackrock-vanguard-shareholdings-in-evergrande-plummet-by-more-than-250m-20210928 https://www.fnlondon.com/articles/blackrock-vanguard-shareho... The Financial Times in late September estimated BlackRock's total exposure to Evergrande at $400 million. At their scale they can take a $250-$400 million loss and shrug it off. Evergrande represents a several hundred billion dollar problem for China domestically, and that's before you get to the cascade risk for their property market (which represents 65-70% of all household assets in China).
  - baybal2 5y ago
    Is it important, or the fact that a megafund like BlackRock makes completely hopeless C rated bonds from a very shady market 1% of their fund? 1% of a BlackRock fund is a megaton of money. Remember, LTCM went down after a few percent sell-off turning into an avalanche. And yes, this below is very appropriate. https://blackrockloveschina.com/ https://blackrockloveschina.com/
    - curuinor 5y ago
      1.7 billion fund to blackrock is nothing to them, shove like 5-10 peeps to it, tops also the vast majority of blackrock's holdings are unleveraged equity
    - tedunangst 5y ago
      Is blackrock leveraged 100x on evergrande bonds?
- loeg 5y ago
  Source on Vanguard's ownership of Evergrande bonds? The linked article mentions some other companies (Fidelity, etc) but not Vanguard.
  - baybal2 5y ago
    It was in the headlines recently. I can't recall where.
rapsey 5y ago
No they are not afraid of China. They are afraid of people panicking in the US/EU.
DebtDeflation 5y ago
Apologies for responding to my own post, but if you do a Google news search for Evergrande the first link that pops up is: https://www.forexlive.com/news/!/evergrande-met-todays-bond-payment-deadline-20211110 https://www.forexlive.com/news/!/evergrande-met-todays-bond-... The title on Google News is "Evergrande Met Today's Bond Payment Deadline" but if you click to the article the headline changes to "Evergrande met at least part of today's bond payment deadline". What is going on here?
- raesene9 5y ago
  AFAIK the challenge is that Evergrande and its bond holders don't make public statements about the repayments, so it's unclear whether they've been made or not. However in this case it seems that a bondholder has explicitly stated that they have not been paid by the deadline https://twitter.com/dhthakur745/status/1458499174026997760?s=20 https://twitter.com/dhthakur745/status/1458499174026997760?s... Which means that, if true, Evergrande have now defaulted.
  - PicassoCTs 5y ago
    So, the usual defaulting mechanism does not work. (Size of investment gives claim percentage, bank loans are fulfilled first). Instead, its a quite bizarr negotiation process- local investors first, then citizens (to prevent a riot) - then if anything is left, the international investors. If that is the full approach, then a massive retreat of investment out of china is to be expected.
    - Arnt 5y ago
      That only happens after default, and default happens when a loan can't be repaid. Evergrande wasn't bankrupt yesterday, so the bankruptcy rules don't apply today. They may tomorrow, for the loans that weren't repaid today (or in the past).
      - DebtDeflation 5y ago
        Yeah, people seem to forget that "default" is a technical legal term meaning failure to fulfill a contractual obligation, in this case failure to make an interest payment on a bond by a specified date. If they didn't make the payment today, then they are in default. Bankruptcy is a more nebulous term and can refer to the filing, the court proceeding, or the final judgement. Being in default is a matter of fact and is not dependent on any of that.
csours 5y ago
To some extent, markets follow Looney Tunes logic - if you don't look down you aren't falling yet.
fny 5y ago
I actually think NYT updated this headline too: I swear it said the opposite earlier today, but I can't find it on newdiffs.
chunghuaming 5y ago
Some investors have not received Evergrande unit's bond interest due Nov 6, say sources https://www.reuters.com/business/some-evergrande-units-offshore-bondholders-have-not-got-interest-due-nov-6-say-2021-11-08/ https://www.reuters.com/business/some-evergrande-units-offsh... Evergrande bondholders say they have not received $148m interest payments https://www.ft.com/content/88dcb535-3945-4138-b394-dda82292b638 https://www.ft.com/content/88dcb535-3945-4138-b394-dda82292b... Basically, selective default by Evergrande. Full official default likely very soon, and for most of the Chinese real estate companies. 加速加速加速更快看到结局
- shoto_io 5y ago
  What are the implications of this?
  - PicassoCTs 5y ago
    China will choose internal stability over external connections. Internal investors (party officials, chineses companies and private investors will receive partial reparations for their lost investments - or goods (flats etc.) International Investors like BlackRock will take a massive bath.
  - chunghuaming 5y ago
    GDP decline of 2-5%, recession: Chinese real estate is 70% of household wealth, and 30% of GDP. Likely these #s are worse, since the government obfuscates data. Home sales is already down 30% y/y. Pressure on tech and other industries in China: Xi Jing Ping will officially be a dictator, come party congress 2022. Tech and real estate are industries owned by the oligarchs of Shanghai faction, which is against Xi Jing Ping. Even more societal lockdowns: In the last few months, there were silencing of a #metoo incident, scrubbing of a famous actress from internet, removing discussions of evergrande bankruptcy, and disappearing/reapperance of alibaba's ceo. Look for more of these. No war attempt on Taiwan in the near future: between real estate collapse, economic decline, coal shortage, food shortage, inflation, huge debts, and covid waves/lockdowns, CCP won't have any appetite. Suicidal war attempt on Taiwan: CCP may get desperate when riots broke out, or need a victory to focus its citizen's outrage elsewhere. Then they'll face the combined forces of western countries, and will have to suffer through economic sanctions.
mindslight 5y ago
If anything, the quotes you cite make it seem like the misleading slant of the headline is the speculation about possible default based entirely on an unknown. Two out of three bonds being paid is normal, and the third being unknown is not evidence of much. Furthermore, it seems to me that saying a company has defaulted is a pretty serious statement that would constitute libel if not appropriately checked. And so even with a few unofficial reports of bond holders not getting paid, it would be irresponsible to prematurely declare a default. The facts that have been reported certainly don't look good, but it's also the press's modus operandi to sensationalize.

deleted 5y ago

[deleted]

baybal2 5y ago

> Is the financial press just afraid of upsetting China here? BlackRock is the biggest foreign owner of Evergrande bonds. Next there are Vanguard, and a few other equally big Western funds. https://www.reuters.com/business/finance/blackrock-hsbc-among-largest-buyers-evergrande-debt-morningstar-2021-09-21/ https://www.reuters.com/business/finance/blackrock-hsbc-amon...

adventured 5y ago
Where does the article say that? It says: "BlackRock, HSBC among largest buyers of Evergrande debt" Those are relatively recent purchases and they were tiny re BlackRock - "BlackRock added 31.3 million notes of Evergrande's debt between January and August 2021, pushing its stake in the company to 1% of the assets in its $1.7 billion Asian High Yield Bond Fund, according to Morningstar." 1% of $1.7 billion, or $17 million. That's equal to 1/100th of 1% of BlackRock's assets. And they've got $9+ trillion under management. BlackRock has taken a hit on their equity in Evergrande, which is already largely toast: "The data also shows that BlackRock, the world’s largest asset manager, has suffered a $95.3m book loss on its Evergrande holding, which at the start of the year stood at just over $111m." https://www.fnlondon.com/articles/blackrock-vanguard-shareholdings-in-evergrande-plummet-by-more-than-250m-20210928 https://www.fnlondon.com/articles/blackrock-vanguard-shareho... The Financial Times in late September estimated BlackRock's total exposure to Evergrande at $400 million. At their scale they can take a $250-$400 million loss and shrug it off. Evergrande represents a several hundred billion dollar problem for China domestically, and that's before you get to the cascade risk for their property market (which represents 65-70% of all household assets in China).
- baybal2 5y ago
  Is it important, or the fact that a megafund like BlackRock makes completely hopeless C rated bonds from a very shady market 1% of their fund? 1% of a BlackRock fund is a megaton of money. Remember, LTCM went down after a few percent sell-off turning into an avalanche. And yes, this below is very appropriate. https://blackrockloveschina.com/ https://blackrockloveschina.com/
  - curuinor 5y ago
    1.7 billion fund to blackrock is nothing to them, shove like 5-10 peeps to it, tops also the vast majority of blackrock's holdings are unleveraged equity
  - tedunangst 5y ago
    Is blackrock leveraged 100x on evergrande bonds?
loeg 5y ago
Source on Vanguard's ownership of Evergrande bonds? The linked article mentions some other companies (Fidelity, etc) but not Vanguard.
- baybal2 5y ago
  It was in the headlines recently. I can't recall where.

rapsey 5y ago

No they are not afraid of China. They are afraid of people panicking in the US/EU.

DebtDeflation 5y ago

Apologies for responding to my own post, but if you do a Google news search for Evergrande the first link that pops up is: https://www.forexlive.com/news/!/evergrande-met-todays-bond-payment-deadline-20211110 https://www.forexlive.com/news/!/evergrande-met-todays-bond-... The title on Google News is "Evergrande Met Today's Bond Payment Deadline" but if you click to the article the headline changes to "Evergrande met at least part of today's bond payment deadline". What is going on here?

raesene9 5y ago
AFAIK the challenge is that Evergrande and its bond holders don't make public statements about the repayments, so it's unclear whether they've been made or not. However in this case it seems that a bondholder has explicitly stated that they have not been paid by the deadline https://twitter.com/dhthakur745/status/1458499174026997760?s=20 https://twitter.com/dhthakur745/status/1458499174026997760?s... Which means that, if true, Evergrande have now defaulted.
- PicassoCTs 5y ago
  So, the usual defaulting mechanism does not work. (Size of investment gives claim percentage, bank loans are fulfilled first). Instead, its a quite bizarr negotiation process- local investors first, then citizens (to prevent a riot) - then if anything is left, the international investors. If that is the full approach, then a massive retreat of investment out of china is to be expected.
  - Arnt 5y ago
    That only happens after default, and default happens when a loan can't be repaid. Evergrande wasn't bankrupt yesterday, so the bankruptcy rules don't apply today. They may tomorrow, for the loans that weren't repaid today (or in the past).
    - DebtDeflation 5y ago
      Yeah, people seem to forget that "default" is a technical legal term meaning failure to fulfill a contractual obligation, in this case failure to make an interest payment on a bond by a specified date. If they didn't make the payment today, then they are in default. Bankruptcy is a more nebulous term and can refer to the filing, the court proceeding, or the final judgement. Being in default is a matter of fact and is not dependent on any of that.

csours 5y ago

To some extent, markets follow Looney Tunes logic - if you don't look down you aren't falling yet.

fny 5y ago

I actually think NYT updated this headline too: I swear it said the opposite earlier today, but I can't find it on newdiffs.

chunghuaming 5y ago

Some investors have not received Evergrande unit's bond interest due Nov 6, say sources https://www.reuters.com/business/some-evergrande-units-offshore-bondholders-have-not-got-interest-due-nov-6-say-2021-11-08/ https://www.reuters.com/business/some-evergrande-units-offsh... Evergrande bondholders say they have not received $148m interest payments https://www.ft.com/content/88dcb535-3945-4138-b394-dda82292b638 https://www.ft.com/content/88dcb535-3945-4138-b394-dda82292b... Basically, selective default by Evergrande. Full official default likely very soon, and for most of the Chinese real estate companies. 加速加速加速更快看到结局

shoto_io 5y ago
What are the implications of this?
- PicassoCTs 5y ago
  China will choose internal stability over external connections. Internal investors (party officials, chineses companies and private investors will receive partial reparations for their lost investments - or goods (flats etc.) International Investors like BlackRock will take a massive bath.
- chunghuaming 5y ago
  GDP decline of 2-5%, recession: Chinese real estate is 70% of household wealth, and 30% of GDP. Likely these #s are worse, since the government obfuscates data. Home sales is already down 30% y/y. Pressure on tech and other industries in China: Xi Jing Ping will officially be a dictator, come party congress 2022. Tech and real estate are industries owned by the oligarchs of Shanghai faction, which is against Xi Jing Ping. Even more societal lockdowns: In the last few months, there were silencing of a #metoo incident, scrubbing of a famous actress from internet, removing discussions of evergrande bankruptcy, and disappearing/reapperance of alibaba's ceo. Look for more of these. No war attempt on Taiwan in the near future: between real estate collapse, economic decline, coal shortage, food shortage, inflation, huge debts, and covid waves/lockdowns, CCP won't have any appetite. Suicidal war attempt on Taiwan: CCP may get desperate when riots broke out, or need a victory to focus its citizen's outrage elsewhere. Then they'll face the combined forces of western countries, and will have to suffer through economic sanctions.

mindslight 5y ago

If anything, the quotes you cite make it seem like the misleading slant of the headline is the speculation about possible default based entirely on an unknown. Two out of three bonds being paid is normal, and the third being unknown is not evidence of much. Furthermore, it seems to me that saying a company has defaulted is a pretty serious statement that would constitute libel if not appropriately checked. And so even with a few unofficial reports of bond holders not getting paid, it would be irresponsible to prematurely declare a default. The facts that have been reported certainly don't look good, but it's also the press's modus operandi to sensationalize.