Good luck rescuing Chinese ponzi-developers


Some numbers courtesy of Barclays.

How severe are the haircuts required? In our view, the absence of debt-principal haircuts for developers with highly leveraged balance sheets and unsustainable capital structures implies that repeated restructurings are likely in the future.

By failing to address its level of debt, the issuer effectively kicks the can down the road. This may solve short-term liquidity crunches but does not tackle the bigger solvency problem.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.