Credit - The Second Wave - Evergrande
Idea for Credit:
- Stocks had a bit of a reprieve as China's collapsing property firms were halted for 2 weeks, and China's markets had gone on holiday for Golden week.
- Stock market had an unwinding of hedges last week, but are things really 'Back to Normal'?
- The bond market does not think so, and seems to be presaging more drawdown to come.
- EM High Yield has been in capitulation, while US Corporate bonds and HY are accelerating their declines.
- High Yield Spreads are about to breakout.
- This is a problem that has not simply gone away, but rather will only get worse.
- Nikkei had even erased all losses of the year in 2 weeks, then lost them again in 2 weeks more, to continue its bear market:
- Remains to be seen how far-reaching the effects will be on China's 5T property market. The drag on global property market is real:
More to come on that later.
The stock market has its best days in bear markets as volatility increases, and this is really telling of the situation. I think we are already in a global bear market and recession.
110 1911 222
GLHF
- DPT
- Stocks had a bit of a reprieve as China's collapsing property firms were halted for 2 weeks, and China's markets had gone on holiday for Golden week.
- Stock market had an unwinding of hedges last week, but are things really 'Back to Normal'?
- The bond market does not think so, and seems to be presaging more drawdown to come.
- EM High Yield has been in capitulation, while US Corporate bonds and HY are accelerating their declines.
- High Yield Spreads are about to breakout.
- This is a problem that has not simply gone away, but rather will only get worse.
- Nikkei had even erased all losses of the year in 2 weeks, then lost them again in 2 weeks more, to continue its bear market:
- Remains to be seen how far-reaching the effects will be on China's 5T property market. The drag on global property market is real:
More to come on that later.
The stock market has its best days in bear markets as volatility increases, and this is really telling of the situation. I think we are already in a global bear market and recession.
110 1911 222
GLHF
- DPT
Comment:
Evergrande coupon dates:
Oct 11, 19, 30
Nov 6
Dec 28
Could be good to mark these dates
Oct 11, 19, 30
Nov 6
Dec 28
Could be good to mark these dates
Comment:
Around Oct 23 is the earliest default date for 3333 (after grace period of missed payments)
Comment:
Yes, Evergrande seems to have avoided default on the 23rd on onshore bonds, but 29th is the grace period for offshore payment, which is what actually matters. Furthermore, Modern Land becomes China's 4th property developer to default:
Fantasia Holdings, Sinic Holdings, and China Properties have already defaulted on offshore bonds this month. This is not only an ongoing trend, but a collapse of a sector. No it is not contained and will spillover:
Fantasia Holdings, Sinic Holdings, and China Properties have already defaulted on offshore bonds this month. This is not only an ongoing trend, but a collapse of a sector. No it is not contained and will spillover:
Comment:
Evergrande officially defaults on offshore USD bonds.
US media finally acknowledges risks to global financial system and global economic growth, affecting the US... 5 months after yours truly:
www.bloomberg.com/ne...ds-evergrande-update
China 5yr CDS at levels not seen since the 2020 crash. The Bill Ackmans of China are loading up.
US media finally acknowledges risks to global financial system and global economic growth, affecting the US... 5 months after yours truly:
www.bloomberg.com/ne...ds-evergrande-update
China 5yr CDS at levels not seen since the 2020 crash. The Bill Ackmans of China are loading up.
"Outstanding property loans-primarily mortgages, but also loans to developers-accounted for 27% of China's total $28.8 trillion in bank loonas at the end of June, according to Moody's Analytics."
Almost $8T of loans at risk, and obviously more from derivative positions. Xi tends to stick to his words and do what he says he will do. He didn't shy away from Alibaba's Jack Ma.
www.wsj.com/art...rms-11633972484?mod=hp_lea...
The Second Wave of debt crisis is indeed coming.