Examples
Lehman Brothers Minibonds that are affordable to average retail investors.
Products sold by Big Boys are safe lah! ???
Latest financial snake oil is ...
ONE of China Evergrande Group's main lenders has made provisions for losses on a portion of its loans to the embattled property developer, while some creditors are planning to give it more time to repay, four bank executives told Reuters.
The Chinese banks' measures, reported for the first time, show how financial institutions in the world's second-largest economy are bracing for a possible collapse of Evergrande.
The developer epitomised China's freewheeling era of borrowing and building, with nearly US$305 billion in liabilities across loans, bonds, so-called trust products and money owed to contractors and suppliers, among others.
Agricultural Bank of China (AgBank), the country's No 3 lender by assets, has made some loan loss provisions for part of its exposure to Evergrande, one of the executives said, without giving details.
Meanwhile, China Minsheng Banking and China Citic Bank, two other major Evergrande lenders, are prepared to roll over some of their near-term debt obligations, two separate sources with knowledge of each situation said.
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Retails should have kept a close eye on & followed those senior Evergrande execs who redeemed their own large positions in wealth mgmt products in May-July.
ReplyDeleteSeems like 80,000 Chinese retails spent at least US$7B on various Evergrande investment products, which the company used to pay for various construction projects in China.
Some kind of restructuring for Evergrande .... will be bad for investors & most bondholders, but Beijing will probably try to ensure the 1.5M condos & apartments get built LOL.
Frankly, I doubt this event is going to result in a big correction in markets outside of China.
From FT.com:
Some Evergrande bonds have recently traded as low as 20 cents on the dollar, while yields on other Chinese property groups’ debt have risen sharply.
Two Evergrande executives, who asked not to be identified, told the Financial Times that the group’s operations could be taken over by local governments and large state-owned developers on a “region-by-region basis”, but added that such a complicated rescue would be a “last resort”.
“Banks must extend our loans,” one of the executives said. “If they stop working with us, we will die right away. How is [the government] going to deal with so many unfinished [property] projects and handle so many retail investors?”
The value of Evergrande’s Hong Kong-traded shares has fallen almost 90 per cent over the past year.