Evergrande morphs into iron ore Lehman Brothers

Evergrande. Remember the name. The Chinese megadeveloper is rapidly morphing into some kind of Chinese ‘Lehman Brothers moment’.

The Three Red Lines policy that is designed to deleverage large developers has triggered this latest round of crisis. Evergrande is preposterously leveraged with its equity worth less than 10% of enterprise value, owing to huge debts that it is desperately trying to rationalise via asset sales, refinancing and discounted apartment sales.

The problem is, increasingly, all of Evergrande’s funding markets are drying up as they lose faith the developer’s ability to pull it off. So far we have seen:

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