China megadeveloper lurches further into crisis

Evergrande should perhaps be rebranded Lessgrande. As it lurches daily from one debt crisis to the next, it is shrinking at a marvelous rate. Bloomie:

  • Total borrowings fell 15% from March to $88bn by cutting land buys, doing fire sales and selling businesses.
  • EGR needs to cut debt to $54bn by 2023 to meet the three red-lines policy.
  • 2025 dollar bonds sank to 67 cent on the dollar and liquidity is clearly fragile.
  • Some home buyers are upset and demanding refunds as EGR discounts itself to deleveraging.

Bloody shaky seems about the right description for that plan. Moreover:

Moody’s has downgraded EGR to B2.

Evergrande’s offshore bonds have come under pressure, with its dollar note due 2025 falling 1.5 cents on the dollar to 66.1 cents Wednesday, set for its lowest since March 2020, Bloomberg-compiled prices show.

My own table is not getting any less red. On the contrary:

I still don’t think it’ll result in systemic crisis but it doesn’t need to for it to matter. See land purchases, the key leading indicator for Chinese property development and local government venue for infrastructure:

Half of the global seaborne iron ore market.

Houses and Holes
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