The Evergrande Group borrowed over 300 billion dollars and now they can't pay their bills.
This default on the debt, is causing a major collapse in the Chinese real estate market and the stock market in China.
The bankruptcy and collapse of Evergrande, will have massive effects on Chinese homebuyers, who will lose their deposits and on other business and individuals, contracted by Evergrande every year.
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Now normally corporate debt itself, is not a problem or a bad thing, it’s a very common way of financing and growing the company, without having to share it, with greedy investors, that try to get the grummy little paws, all over your business, while hounding you for quarterly reports. All, you have to do, is manage this debt properly.
You see, regulators in China have actually been a sleep for quite some time now, and they let real estate companies barrow just a shitload of money and when I say shitload I do mean a shitload.
We’re talking, trillions of dollars in debt here of which a major part is basically junk debt.
They allowed it, because it was fuelling major growth in China, however all this growth, financed solely by excessive borrowing, is not without risk.
#evergrande #default #financialcrisis #evergrandegroup #realestatedebt #hongkongstockmarket #china
Video Structure:
00:00 Intro
00:48 Corporate Debt
01:27 Evergrande Group pushing the limits
02:09 Chinese regulators losing control
03:28 Evergrande struggling with interest payments
04:22 How did Evergrande continue to borrow
06:08 Why did the Evergrande Group need so much money
07:10 The fallout from the Evergrande collapse
09:12 Evergrande defaulting on loans
Now you might ask, how was Evergrande still able to secure funds if they were no longer allowed to. Well, this is were the magic banking tricks come into play, better known as shadow banking.
Because the wonderful executives of Evergrande, simply sought out new ways to get hold on funds. They did this trough three main ways, Trust loans, wealth management products, and commercial paper.
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About - FBE Capital
We dive into the world of international finance and banking, providing financial advise on a whole host of issues including, financing, banking, lending, mortgages, investing, trading, forex, borrowing, debt, credit & credit cards, passive income, regulations, and many more subjects.
New York 2021/2022
