EVERGRANDE

International bond investors facing 22.5 billion USD write-offs - Seite 2

period. So far, there are only unconfirmed press reports that the interest has
been paid into escrow accounts.

However, it has not yet been received by the creditors. This would mean that the
company would have gone bankrupt. But even if the interest had been paid this
time, it would only be a postponement of insolvency. Because from now on, it
will be one blow after the other: The next but one (also already in arrears)
must be paid by November 10.

In addition, Evergrande is due to make a further 275.8 million US dollars in
regular coupon payments by December 6. And until January 27, distributions of
another 255.2 million US dollars are due. If it is indeed possible to service
all the coupons due, a much larger chunk of the repayment of a
two-billion-dollar bond will have to be paid off by March 23, 2022 at the
latest.

According to the respected Chinese business magazine Caixin, Evergrande will
have to raise a total of 106 billion euros for interest and repayments within
the next twelve months. "In the unlikely event that the Chinese government does
not step in, Evergrande's collapse must be regarded as certain," says report
author Metzler, interpreting these figures.

The bankruptcy of the dangerously lurching developer is merely the first stage
of a financial chain reaction that such a bankruptcy is likely to trigger. In
their report, Dr. Metzler and Co. make it clear that Evergrande is not the only
Chinese real estate developer in trouble. Fantasia, Modern Land and Sinic, for
example, have also recently been unable to service their debts. The entire real
estate sector, which accounts for 25 to 30 percent of economic output in China,
is completely overheated. Any bankruptcy can drag down other Chinese real estate
companies, banks and insurers.

In addition, an Evergrande bankruptcy is likely to significantly slow down
Chinese economic growth. The economic problems in China will then become even
more apparent. Keywords: energy and raw material shortages, plant and port
closures, and the over-indebtedness of the state, companies and private
individuals. The debt ratio is already 230 percent of the country's annual
economic output. "This could have devastating consequences for the global
economy. Supply chains would be put under even greater strain than they already
are today - if they don't break completely," predicts report author Marco
Metzler. This, in turn, would then inevitably lead to galloping inflation in the
USA and Europe.

In the view of the report authors, a bankruptcy of Evergrande has the potential
to lead to extreme disruption of the global financial system - with bankruptcies
of players that are still considered rock solid today. "Triggered by a Chinese
financial virus called Evergrande, the world may be facing a 'Great Reset' - the
final meltdown of the current global financial system," Dr. Marco Metzler
pessimistically concludes.

Please find more information and the research report at
http://www.dmsa-agentur.de/

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