China Nears a Reckoning as Property Firms Face Tough Deadlines
Source: New York Times
Evergrande and Kaisa must come up with hundreds of millions of dollars in days. Beijing sought to reassure markets overall, but signaled it might let Evergrande fail.
Chinas debt-loaded property market is headed for a reckoning, as China Evergrande Group and another troubled housing developer face deadlines for millions of dollars worth of payments in a test of Beijings narrative that it can handle the threat to the Chinese economy.
Evergrande, with bills totaling $300 billion or more, will need to come up with more than $82 million in cash by the end of Monday in the United States to fend off creditors. The developer said late last week that it was unable to make a separate payment worth $260 million, an indication investors took to mean the beginning of its eventual demise. Its shares tumbled by 20 percent on Monday in Asia.
The other developer in distress, Kaisa Group, must pay bondholders $400 million on Tuesday after it said it failed last week to get approval from investors to renegotiate the terms.
Chinas property sector has kept global markets on edge for months, as developers have struggled to find cash to pay their soaring debts. They have been hampered by slowing demand from home buyers, falling property prices in many Chinese cities and Beijings crackdown on excessive bank lending.
Read more: https://www.nytimes.com/2021/12/06/business/china-evergrande-kaisa-property.html
Ray Bruns
(4,095 posts)Zorro
(15,740 posts)We'll see how it affects the markets here.
Roy Rolling
(6,917 posts)Its always a virtual Ponzi scheme leaving the final investors bankrupt.
paleotn
(17,912 posts)George II
(67,782 posts)Last edited Mon Dec 6, 2021, 04:53 PM - Edit history (1)
*corrected from billions.
Ford_Prefect
(7,896 posts)TexasTowelie
(112,168 posts)I don't know anybody foolish enough to lend hundreds of billions to TFG.
George II
(67,782 posts)TexasTowelie
(112,168 posts)paleotn
(17,912 posts)and neither would any legitimate financial institution.
TexasTowelie
(112,168 posts)he would sue the person who bought the coffee for him because it was too hot.
Pas-de-Calais
(9,904 posts)China new leader cracking down. Supposedly for the little people. Social media crackdown too. Data is now owned by the government.
Kids can only play games for 3 hours on weekends only. Real estate has hundreds of high rises that are empty and also shopping malls that are empty too
Who do u trust
Govt
Or
Media companies
GOP made noise on taking over media comanies too. Most likely got the idea from China.
BobTheSubgenius
(11,563 posts)65 million vacancies. I'm not at all sure where the "plan" part of "central planning" or "5 year plan" went. Clearly MIA at this point.
cstanleytech
(26,291 posts)that it will assume the entire amount of debt if China will forgive the entire amount of US bonds it owns?
TexasTowelie
(112,168 posts)If for some reason China had to cash out US bonds to cover the debts, then they would assume a penalty for not holding those bonds to maturity. The US would be in the bargaining position so they should demonstrate what capitalism is all about and make a tidy profit for helping the Chinese to avoid or delay a more serious economic disaster.
pecosbob
(7,538 posts)Real estate is the only type investment available to most people in China.
roamer65
(36,745 posts)Its that or a very severe market crash.
Sapient Donkey
(1,568 posts)roamer65
(36,745 posts)Basically converting them to cash.
That ought to get inflation in China roaring.
Sapient Donkey
(1,568 posts)Or however that works today
roamer65
(36,745 posts)You got it.