China Evergrande, the second largest Chinese real estate company, announced it will make a coupon payment of $35.88 million on the onshore (Chinese bond market) debt. The company, in a joint statement with the Shenzhen stock exchange, did not say what will happen on the second coupon due on Sept. 23, for $85.53 million on the offshore debt.
According to former People’s Bank of China advisor Li Daokui, currently at the School of Economics and Management of Tsinghua University, Evergrande’s debt crisis will slow down economic growth in China but won’t have a fallout on the financial system because there are no derivatives built on Evergrande’s debt. According to Italian economist and China specialist Michele Geraci, there will be partial financial support with a bridge loan. If the sector recovers, that is it. Otherwise there will be a further partial aid to “selected investors.” There will be no systemic risk.
The Chinese PBOC central bank injected CN¥120 billion (ca. $18.5 billion) in the repo market, half at 7, and half at 14 days, on Sept. 22.
