Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Goldman Sachs, JPMorgan warn of Evergrande's debt woes spillover risks

EconomySep 15, 2021 09:11AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: The China Evergrande Centre building sign is seen in Hong Kong, China. August 25, 2021. REUTERS/Tyrone Siu/File Photo 2/2

LONDON (Reuters) -Evergrande Group's debt crisis could pose spillover risks to the broader Chinese property sector, Goldman Sachs (N:GS) said in a note on Wednesday.

The developer, which has liabilities of nearly two trillion yuan ($305 billion), is trying to raise funds to pay lenders and suppliers as it teeters between a managed collapse and the more distant prospect of a bailout by Beijing.

"We believe that further disruptions to the company's property development operations can be very negative for sentiment amongst domestic property buyers and investors, and potentially spill over to the broader property sector," Goldman Sachs' Kenneth Ho and Chakki Ting wrote in the note.

If the property operations can be maintained as a going concern, that could mean less scope for contagion, the analysts added.

JPMorgan (NYSE:JPM) too warned of the risk of repercussions.

"With recent events accelerating to the downside, we believe additional manoeuvres are needed by the government to prevent potential spillover," the bank said in a separate note, adding that it expected operations to remain ongoing to protect the interests of customers and suppliers.

"If politicians toe the government directives on ensuring a stable housing market, we do not expect the company's imminent default to be too disruptive for the sector," JPMorgan said.

Goldman Sachs analysts said possible options for Evergrande could include a corporate overhaul to ensure the onshore operations continue, bringing in third parties to invest in the company, and also potential debt and equity restructuring.

Goldman Sachs said offshore bond market sentiment towards Evergrande was also likely to be affected by recovery prospects under a debt restructuring.

With the company's U.S. dollar-denominated bonds priced around the mid-20s cents, and those of subsidiary Tianji Holding just below 20, contagion impact may be limited if restructuring prospects were close to current market levels, the analysts wrote.

Goldman Sachs, JPMorgan warn of Evergrande's debt woes spillover risks
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email