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China Detains Top HNA Group Executives

  • September 24, 2021

It helped that Evergrande said on Wednesday that it had reached a deal with investors over a different payment due for mainland Chinese bondholders.

Given that development, Houze Song, a research fellow at the Paulson Institute in Chicago, said Evergrande was likely to make Thursday’s interest payment eventually. He said bondholders and Evergrande might eventually work through a near-term agreement that involved debt holders losing a portion on their Evergrande exposure.

Evergrande’s fate and what its failure could mean for China’s economy have divided some of the world’s best-known investors. The billionaire investor George Soros recently argued that an Evergrande collapse would set off a broader economic crash, while another billionaire investor, Ray Dalio, argued this week that an Evergrande default was “manageable.”

Investors in the dollar-denominated debt include the Swiss bank UBS, the asset manager BlackRock, the British bank HSBC Holdings and a number of hedge funds. The bonds are linked to various private and public companies that are part of Evergrande but distinct from its core property business, including an electric-vehicle division. Those businesses could still have value even if the real estate arm collapses.

Despite the lingering uncertainty, stock investors seem to expect a better outcome from the Evergrande debacle than they did earlier in the week. On Wall Street, the SP 500 closed up more than 1 percent on Thursday, recouping its sharp losses from earlier in the week — in part as executives at two of Evergrande’s debt holders played down the risk.

Ralph Hamers, the chief executive of UBS, said at an investor conference on Thursday that the bank’s direct exposure to Evergrande was “immaterial,” adding that its troubles have “not been keeping me up at night,” according to a transcript from the software firm Sentieo.

Noel Quinn, the chief executive of HSBC, acknowledged at the same conference that Evergrande’s challenges might seep further into the equity and credit markets.

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