Evergrande and its debt problem

Hui Ka Yan

Inserted 2 years ago

“With the company [Evergrande] resuming construction work at full steam, the group plans to deliver 115 projects in December. With five days left this month, we must go all out to ensure we meet the goal of delivering 39,000 units this month.”

Reuters

Chairman of Evergrande

26 Dec 2021 3 2

Paul Krugman

Inserted 2 years ago

“Rogoff [Kenneth Rogoff] and Yang [Yuanchen Yang] also show both that housing prices in China are extremely high relative to incomes and that the real estate sector has become an incredibly large share of China's economy. None of this looks sustainable, which is why many observers worry that the debt problems of the giant property developer Evergrande are just the leading edge of a broader economic crisis.”

Nytimes

Op-Ed columnist, Distinguished Professor at the City University of New York Graduate Center, 2008 Nobel Prize in Economic Sciences

22 Oct 2021 7 5

Louis Kuijs

Inserted 2 years ago

“Growth was dragged down by a slowdown in real estate, amplified recently by spillover from Evergrande's travails. In response to the ugly growth numbers we expect in coming months, we think policymakers will take more steps to shore up growth, including accelerating infrastructure development and relaxing some aspects of overall credit and real estate policies.”

Aljazeera

Oxford Economics’ head of Asia economics

18 Oct 2021 4 4

Yi Gang

Inserted 2 years ago

“Evergrande is about $300 billion in debt, with one-third of it under financial liabilities. This, adding to diverse creditors and collateral offers for its debts, suggests the spillover of the Evergrande incident on the financial sector is under control. The legitimate rights and interests of creditors and property owners, particularly homebuyers, will be fully respected and protected strictly in line with the legally prescribed order of repayment.”

Globaltimes

Governor of the People's Bank of China

17 Oct 2021 4 3

Kim Eng Tan

Inserted 2 years ago

“We see a risk that a disorderly correction in the property market could cause sharp price declines, hitting the personal wealth of homeowners. Such an event could also contribute to large-scale losses by investors in wealth management products, and the contractors and service firms that support the developers.”

Reuters

Credit analyst at S&P Ratings

13 Oct 2021 3 1

Peter Kisler

Inserted 2 years ago

“It is pretty serious now and it looks like it is going to be long and drawn out process. I don't see the recovery [what Evergrande bondholders get if Evergrande gets broken up] being particularly high. I think 20 cents (for every dollar of the bonds' original face value) is more or less fair.”

Reuters

Fund manager at London-based Trium Capital

12 Oct 2021 2 2

Michel Löwy

Inserted 2 years ago

“I don't expect payments will be made because the group [Evergrande] has to be restructured. I think it's going to be a major hit for bondholders.”

Nytimes

Chief executive of the investment firm SC Lowy

05 Oct 2021 3 2

Andrew Grantham

Inserted 2 years ago

“While there's no certaintly, our base case is that this plays out more like an episode of the property show 'Love it or List it?'. Cracks in the foundation and a number of other problems are revealed. But, when the dust settles, we will end up falling back in love with the Chinese economy again, even if we can't get everything on our current wish list.”

Straight

Economist with CIBC (Canadian Imperial Bank of Commerce)

01 Oct 2021 2 3

Sang-hyun Park

Inserted 2 years ago

“The real crisis looming in the Chinese economy does not concern 'Evergrande,' but the power shortage. Market watchers expect the Chinese government to continue to push for a strong carbon-neutral policy ahead of the Beijing Winter Olympics scheduled from Feb. 4 to 20 next year [2022], and this could significantly slow industrial activities. China has tightened production regulations in line with a green initiative. The recent surge in the price of aluminum is explained in large part by production difficulties due to stricter environmental regulations, compounded by rising demand from eco-friendly industries including manufacturers of EVs and batteries.”

Koreatimes

Chief economist at HI Investment & Securities

29 Sep 2021 8 5

Dexter Roberts

Inserted 2 years ago

“Xu [Xu Jiayin] is a colourful figure. He lived an extravagant lifestyle that is now frowned upon by Xi [Xi Jinping] as he kicks off his 'common prosperity' campaign. For a long time, Evergrande's business model, borrowing large sums of money and aggressively selling apartments that have not even been built, seemed like a smoking gun. Xu is also one of those people Beijing now finds distasteful - flashy and over the top. I'd be really surprised if he emerges from this crisis unscathed.”

Theguardian

Senior fellow at the Washington DC-based Atlantic Council Asia Security Initiative

25 Sep 2021 3 5

Howe Chung Wan

Inserted 2 years ago

“These are periods of eerie silence as no-one wants to take massive risks at this stage. There's no precedent to this at the size of Evergrande ... we have to see in the next ten days or so, before China goes into holiday, how this is going to play out.”

Reuters

Head of Asia fixed income at Principal Global Investors in Singapore

24 Sep 2021 1 2

Tang Renwu

Inserted 2 years ago

“The government knows that if it doesn't handle Evergrande carefully and lets it go bankrupt, disgruntled homeowners and shareholders could cause social instability, loan defaults could lead to financial risk, massive layoffs could add to employment woes, and private firms could be further spooked.”

Reuters

Heads the School of Public Administration at Beijing Normal University

23 Sep 2021 7 4

Alfred Wu

Inserted 2 years ago

“The roots of the crisis date to tax reforms in 1994, which bolstered central government coffers but left local governments reliant on land financing for revenue. Evergrande is a cash cow for regional governments. If the company goes bust, the model of land-financing and regional governments will go bust, too. The central government won't allow that.”

Reuters

Associate professor at Lee Kuan Yew School of Public Policy in Singapore

23 Sep 2021 5 4

Jennifer James

Inserted 2 years ago

“Current market pricing estimates that investors in Evergrande's dollar bonds are likely to recover very little. The likeliest outcome is that the company will engage with creditors to come up with a restructuring agreement. If such a deal is mismanaged the loss of confidence could have contagion effects.”

Reuters

Portfolio manager and lead emerging markets analyst at Janus Henderson Investors

23 Sep 2021 5 3

Cong Yi

Inserted 2 years ago

“Evergrande's crisis is not unexpected, as its development has been influenced by hoarding capital and splashing into unrelated businesses, such as bottled water and new-energy vehicles. The market has overreacted to Evergrande's debt problem. The central government guided the direction of the domestic property market early in 2016: Houses are for people to live in, not for people to speculate on. Hence, the exposure of Evergrande's crisis underscores the authorities' firm determination to regulate a rapidly expanding sector, whose development relies on piles of debt. Those who badmouth Chinese economic prospects because of Evergrande's single case do not understand China's development model. China's future economic development relies on innovation and the real economy, rather than the short-term booster of the property sector.”

Globaltimes

Professor at the Tianjin University of Finance and Economics

23 Sep 2021 3 5

Christina Xie

Inserted 2 years ago

“It's all my savings. I was planning to use it for me and my partner's old age. I worked day and night saving, now it's game over. Evergrande is one of China's biggest real estate companies ... my consultant told me the product was guaranteed.”

Reuters

Person who works in the export sector in the southern city of Shenzhen and put her savings in a wealth management product sold by Evergrande

23 Sep 2021 3 3

Li Hongjun

Inserted 2 years ago

“In the past two days I've been planning to go to the government. What can I do? Soon I'll have no food to eat. If I have no food to eat I'll have to go to the government to eat.”

Reuters

Worker at a construction site in eastern China's Suzhou

23 Sep 2021 1 2

Paul Christopher

Inserted 2 years ago

“The company could restructure its debts but continue in operation, or it could liquidate. In either case, investors in the company's financial instruments likely would suffer some losses. In the event of a liquidation, however, Chinese and global investors could decide that the contagion could spread beyond China.”

Reuters

Head of global market strategy at Wells Fargo Investment Institute

22 Sep 2021 1 2

Park Sang-hyun

Inserted 2 years ago

“The Chinese group's default risk is unlikely to expand into a systemic risk factor to the country's financial market, as the Chinese government is showing little sign of providing any liquidity support to the company under the judgment that the local financial market will be able to absorb the shock from the possible collapse of Evergrande.”

Koreatimes

Hi Investment & Securities analyst

22 Sep 2021 5 2

Freya Beamish

Inserted 2 years ago

“This is not China's 'Lehman moment'. China's authorities will neither allow a complete collapse, nor risk a financial crisis, to make a point about moral hazard.”

Theguardian

Chief Asia economist at Pantheon Macroeconomics

22 Sep 2021 4 3

Ipse Dixit

Ipse Dixit

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“With the company [Evergrande] resuming construction work at full steam, the group plans to deliver 115 projects in December. With five days left this month, we must go all out to ensure we meet the goal of delivering 39,000 units this month.”

“It is pretty serious now and it looks like it is going to be long and drawn out process. I don't see the recovery [what Evergrande bondholders get if Evergrande gets broken up] being particularly high. I think 20 cents (for every dollar of the bonds' original face value) is more or less fair.”

“I don't expect payments will be made because the group [Evergrande] has to be restructured. I think it's going to be a major hit for bondholders.”

“These are periods of eerie silence as no-one wants to take massive risks at this stage. There's no precedent to this at the size of Evergrande ... we have to see in the next ten days or so, before China goes into holiday, how this is going to play out.”

“It's all my savings. I was planning to use it for me and my partner's old age. I worked day and night saving, now it's game over. Evergrande is one of China's biggest real estate companies ... my consultant told me the product was guaranteed.”

“In the past two days I've been planning to go to the government. What can I do? Soon I'll have no food to eat. If I have no food to eat I'll have to go to the government to eat.”

“This is not China's 'Lehman moment'. China's authorities will neither allow a complete collapse, nor risk a financial crisis, to make a point about moral hazard.”

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