By Stan Szymanski
This past Tuesday I reported that Dr. Marco Metzler, former Fitch analyst and now of DMSA (Deutche Mrkt Screening Agentur GmbH) has announced that the past due interest payment on China Evergrande Group’s offshore international bonds that all of the western media reported as supposedly paid by Evergrande could not be confirmed. Today, he is stating that a second interest payment ($47.5 Million) allegedly made by Evergrande according to the western media last night has not been paid, once again contradicting mainstream media reports.
According the the GMBH News Release dated today (10/29/21)…’For the second time in a week, China Evergrande Group has apparently technically defaulted on interest payments to international investors.’… and in the opening paragraph goes on to say…’Should the Evergrande insolvency not only drag down China’s real estate sector, but the entire economy of the country, we will see even bankruptcies of major international banks – such as HSBC, fears DMSA senior analyst Dr. Marco Metzler.’…
…’ But there has been no official confirmation of any payment of that interest by the close of business at Hong Kong banks’…continued Metzler. Besides Encouraging Angels, the only other known doubts that concur with Metzler appear in a recent report in the Financial Times Metzler says in the press release. In that document, Dr. Metzler goes on to state that no one replied to their inquiries as to an actual confirmation of the payments to creditors by Evergrande.
“Thus, the bankruptcy has apparently already technically occurred,” analyzes Metzler.
Evergrande tried to raise capital through the sale of assets. The environment for asset sales is abysmal. The company tried to sell some of its assets to Hopson Development Holdings which fell through. According to reports, the deal would have been worth 20.04 billion Hong Kong dollars ($2.58 billion), according to filings.
This is, of course horrible news for a company who has over $300 billion of debt. How much good would $2.6 billion from the failed Hopson deal done for Evergrande anyway? $2.6 Billion is less than 1% of Evergrande’s indebtedness. A drop in the bucket. Evergrande is indeed, bankrupt no matter what the mainstream brokers of financial information ‘report’.
I have had friends basically say to me ‘If Evergrande defaults, so what? That doesn’t affect us’. In fact one friend sent me research from Janney dated 9/22/21 that stated: …’While the U.S. is not immune to disruptions in other parts of the world, we do not view the situation in China as a contagion risk that will derail the bull market.’…
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h/t alfielad2021