EVERGRANDE
International bond investors facing 22.5 billion USD write-offs
Berlin (ots/PRNewswire) - The almost unavoidable bankruptcy of Evergrande could
even trigger a global financial crisis. This is shown by the DMSA research
report "The Great Reset - Evergrande and the Final Meltdown of the Global
Financial System".
In the research report, former Fitch analyst Dr. Marco Metzler demonstrates that
a bankruptcy of real estate developer Evergrande could trigger a global
financial crisis. The developer, which directly or indirectly employs around
four million people, has accumulated around $300 billion in debt that it cannot
repay on time.
even trigger a global financial crisis. This is shown by the DMSA research
report "The Great Reset - Evergrande and the Final Meltdown of the Global
Financial System".
In the research report, former Fitch analyst Dr. Marco Metzler demonstrates that
a bankruptcy of real estate developer Evergrande could trigger a global
financial crisis. The developer, which directly or indirectly employs around
four million people, has accumulated around $300 billion in debt that it cannot
repay on time.
Metzler, who already correctly predicted the bankruptcy of Mannheimer
Lebensversicherung in 2003, and his two co-authors - Michael Ewy and Asia expert
Duc Dam - demonstrate in detail in the report for the German market screening
agency DMSA that international investors alone have put around 23.67 billion US
dollars into 23 bonds and three large loans of the lurching property developer.
Among the already known institutional investors are such well-known addresses as
Fidelity, Blackrock, UBS, Ashmore Group, Prudential, HSBC, Pictet, Vontobel, BNP
and Allianz. "At the same time, we are far from aware of all international
investors, but only 148 investors with increased reporting obligations, such as
fund companies, who have invested a total of $3.44 billion, are known. There
could still be some negative surprises here," believes Dr. Metzler.
(Note: The list of investors known so far can be taken from the DMSA report
available at http://www.dmsa-agentur.de ).
Particularly dangerous: At the end of September, the rating agency Fitch
downgraded Evergrande's credit rating to C, giving it a recovery rating of RR6
for outstanding bonds. In other words, the agency expects investors to recover
only zero to ten percent of their invested capital in the event of Evergrande's
bankruptcy. "Assuming an average recovery of five percent, international
investors would have to immediately write off around $22.5 billion in the event
of insolvency," report author Metzler calculates. "In the worst case, some of
the international investors we don't know today could then also face
bankruptcy."
The bankruptcy of Evergrande itself, on the other hand, has probably already
occurred. As of Monday morning German time, no confirmation had been received -
neither from Evergrande itself, nor from rating agencies on the ground, affected
bond investors or banks involved - that overdue interest of $83.5 million had
been paid at the end of last week - the last possible date of the 30-day grace
Lebensversicherung in 2003, and his two co-authors - Michael Ewy and Asia expert
Duc Dam - demonstrate in detail in the report for the German market screening
agency DMSA that international investors alone have put around 23.67 billion US
dollars into 23 bonds and three large loans of the lurching property developer.
Among the already known institutional investors are such well-known addresses as
Fidelity, Blackrock, UBS, Ashmore Group, Prudential, HSBC, Pictet, Vontobel, BNP
and Allianz. "At the same time, we are far from aware of all international
investors, but only 148 investors with increased reporting obligations, such as
fund companies, who have invested a total of $3.44 billion, are known. There
could still be some negative surprises here," believes Dr. Metzler.
(Note: The list of investors known so far can be taken from the DMSA report
available at http://www.dmsa-agentur.de ).
Particularly dangerous: At the end of September, the rating agency Fitch
downgraded Evergrande's credit rating to C, giving it a recovery rating of RR6
for outstanding bonds. In other words, the agency expects investors to recover
only zero to ten percent of their invested capital in the event of Evergrande's
bankruptcy. "Assuming an average recovery of five percent, international
investors would have to immediately write off around $22.5 billion in the event
of insolvency," report author Metzler calculates. "In the worst case, some of
the international investors we don't know today could then also face
bankruptcy."
The bankruptcy of Evergrande itself, on the other hand, has probably already
occurred. As of Monday morning German time, no confirmation had been received -
neither from Evergrande itself, nor from rating agencies on the ground, affected
bond investors or banks involved - that overdue interest of $83.5 million had
been paid at the end of last week - the last possible date of the 30-day grace