A major bankruptcy emergency is about to hit China with defaults approaching half a trillion dollars. But, they have taken a page from the Democratic playbook and claim it will cost nothing. So, now it’s all good just like the Democratic spending plans.
Now, besides Evergrande that we knew about, three more companies in China will not be able to meet their obligations. That alone was going to create a crisis in the Chinese economy, and now it will get worse.
Earlier this morning two other companies in the China real estate business were identified in situations just like Evergrande. CNBC reports on Fantasia Holdings:
Ratings agencies have downgraded Chinese developers Fantasia Holdings and Sinic Holdings over risks from their strained cash flow situations.
Fantasia did not repay the principal amount of $206 million of a bond that matured on Monday, it said in a filing to the Hong Kong exchange…
…The fallout from Fantasia, however, would be smaller compared with Evergrande.
Evergrande is the world’s most indebted property developer with liabilities of $300 billion, while Fantasia has total liabilities of 82.9 billion yuan ($12.8 billion), according to its first-half financial statement.
Sinic is also facing solvency issues per CNBC:
The ratings agency [S&P] said that the Chinese developer is likely to default on its $246 million offshore dollar-denominated bond due Oct. 18. Sinic‘s local subsidiaries have already failed to make $38.7 million in interest payments on two onshore yuan-denominated bonds that were due Sept. 18, S&P said.
Sinic has total liabilities of $14.2 billion, its first-half financial statement showed. Shares of the Chinese real estate developer have been halted since Sept. 20.
We’ve reported on the Hong Kong behemoth Evergrande that has been going under for a month. They have tried several times to revive the company, but to no avail. The news about Evergrande hit about September 9th, 2021 and now it appears that the end is near. They have massive real estate holdings, but many of those properties are not occupied with no revenue coming in. Evergrande is carrying more debt than any company in the world and its collapse will be felt throughout the entire Chinese economy.
How long before Joe Biden decides to bail them out? He will make the case that Evergrande’s collapse will hurt our economy, too. And it will.