Pantheon Economics gives us the rub:
Evergrande evades default for now, as it continues to sell assets at sizeable discounts, most recently its stake in a streaming services firm, sold at a 24% discount. The next test for the developer is a $255.2M coupon on December 28, which the $273M from this sale should help cover. But Q1 2022 then sees three additional coupon payments, before a £2.1B maturity in March, and another $1.5B due in April. Evergrande is not out of the woods yet, and nor are other developers.
Kaisa, another big beast, is trying to push back repayment of a $400M bond due December 7, and faces $2.8B in repayments in 2022. Smaller counterpart, Aoyuan, has reportedly defaulted on a trust product, in another sign of the contagion risks from property, though the firm has issued a denial. China’s trust sector had invested around RMB 1.7T in real estate as of June or about 13% of funds, per media reports. Yet for some trust companies, the exposure to real estate is over 50%. Total exposure is likely even higher, thanks to lending to firms in the property supply chain.