FirstFT: Evergrande’s maturity chills the spine in the Asian debt market

Updates from the Evergrande real estate group

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Heightened concerns over Evergrande sparked the sale of a $ 428 billion wedge of the Asian debt market, highlighting how the Chinese real estate developer’s crisis is spreading to other assets as traders and investors alike. were preparing for a crucial payment deadline yesterday.

Once the deadline has passed, the payment status remained unclear, CNN reported, and bond holders found themselves waiting for more information. Chinese authorities, however, have asked local governments to prepare for the possibility of Evergrande’s fall, according to the Wall Street Journal.

The Evergrande bond on which the interest payment was due was trading at around $ 0.28 to the dollar, a signal of substantial distress, as traders worried about the potential fallout if the company began to miss payments. Failure to pay interest could trigger China’s biggest debt restructuring.

It would also mark the most severe shock to date in a market to which international asset managers had been drawn with lucrative returns as global bond yields were near their all-time lows.

Meanwhile, Xi Jinping, just one year away from an unprecedented third term, is taking one of the biggest economic bets of his presidency by leaving Evergrande on the brink of bankruptcy. (FT, CNN, Reuters, WSJ)

Read more:

What do you think would be the impact if Evergrande were to default? Write to me at [email protected] and tell me what you think. Thanks for reading FirstFT Asia. – Emilie

Five other articles in the news

1. The Goldman executive who led the initial launch of consumer banking Harit Talwar, who led Goldman Sachs’ push into personal banking, left the bank in October, 10 months after transferring day-to-day management of the business. The departure crystallizes a transition to a new phase of leadership in its consumer activity.

3. Turkey cuts interest rates as inflation skyrockets The central bank unexpectedly cut its benchmark interest rate on Thursday, despite accelerating inflation that had made borrowing costs negative in real terms. The pound fell more than 1.5% on the move, hitting an all-time low of 8.80 TL to the US dollar.

3. The American envoy to Haiti resigns The US special envoy to Haiti resigned to protest what he described as the “inhuman and counterproductive decision” of the Biden administration to deport thousands of Haitian migrants.

4. China calls for end to sanctions against Afghanistan Beijing called for the lifting of economic sanctions against Afghanistan and the Taliban’s access to billions of dollars in frozen foreign exchange reserves, highlighting a growing rift between China and the West over the future of the country.

5. US and Chinese climate commitments raise hope ahead of COP26 A surprise announcement by President Xi Jinping that Beijing would end funding for international coal-fired power plants, combined with a new pledge from President Joe Biden to double US climate aid, injected a rare note of optimism into the tense negotiations on the climate, just five weeks before the Glasgow summit.

Coronavirus digest

  • The Asian Development Bank lowered its 2021 economic growth forecast for developing Asia amid concerns about the direction of the pandemic.

  • Novavax has applied for an emergency use authorization for its Covid-19 vaccine from the World Health Organization, whose approval would allow the use of the vaccine in the Covax program.

  • The UK issued a last-minute quarantine waiver for ministers from “red list” countries attending the upcoming United Nations climate summit.

  • United States Food and drug administration approved a third injection of the BioNTech / Pfizer Covid-19 vaccine for vulnerable Americans.

  • Cases of Covid-19 among schoolchildren in England have reached an all-time high, raising the specter of an interruption in education.

Chart showing cases among school-aged children in England are at an all-time high, and there are signs that this is spilling over to their parents' age group

The coming days

Japan Economic Data The Consumer Price Index and PMIs for manufacturing and services will be released today. Last month, the country’s service sector shrunk at the fastest rate in over a year. (FT, Reuters)

British Labor Party Conference The annual summit kicks off in Brighton on Saturday. Labor leader Sir Keir Starmer is expected to focus heavily on the cost of living crisis. Ahead of the conference, Starmer faced pressure to delay Labor leaders’ plans to rewrite electoral rules.

Germany’s election Ahead of election day Sunday – and the end of the Angela Merkel era – elections in the country are wide open. Rarely has such a crucial democratic exercise been tainted with so much uncertainty. Never before have the Germans been faced with such a wide range of possible electoral outcomes. Follow the latest news with our survey tracking tool and our Europe Express newsletter.

Live update of the graphs of the latest voting intention polls for the German Bundestag elections.

What else do we read and listen to

Blackstone’s collapsed deal shows ‘everything is political’ in China After the buyout group was forced to cancel a $ 3 billion deal to buy real estate developer Soho China, the private equity industry is reassessing how to bet on the world’s second-largest economy. The episode highlighted that even highly connected people can find it difficult to navigate the country’s political environment.

Inside the ESG A special 5-part podcast series launches today, analyzing the colossal sums of money invested in sustainable investing. Produced in partnership with the Moral Money team, the first part of the series asks: is it true that ESG investing can solve some of the world’s most pressing problems, including climate change and inequality? You can listen to the second part here. Sign up for our Moral Money email here.

Biden tax plan quiz What do you know about President Joe Biden’s tax proposals? Take the FT’s new quiz on the proposals making their way to Congress. First question: How has the top federal marginal income tax rate (%) evolved over time, and what is it today? To answer click here.

Five takeaways from the last Fed meeting This week’s Federal Reserve meeting ended with a clear message: Monetary policy in the United States is about to get much tighter. From debt ceiling woes to fears of contagion from the debt crisis in Evergrande, China, FT’s Colby Smith breaks down the lessons from this week’s meeting.

What we can learn from the nascent crypto economy in Afghanistan Reports suggest wealthy Afghans are using crypto to store wealth and move money overseas. Developments should make us reflect on the slippery subject of trust and “credit” in finance. Even though we live far from the country, and even though we love or hate bitcoin, writes Gillian Tett.

Fashion

Lauren Indvik of FT gives a London Fashion Week dispatch during a tough time for UK fashion. It highlights the energetic debuts of Steven Stokey-Daley and Harris Reed, and an appearance by Mayor Sadiq Khan who livened up a somewhat muted schedule.

Members of the National Youth Theater modeled SS Daley's first solo show © Haydon Perrior for Thomas De Cruz Media (@haydonperrior for @thomasdecruzmedia)

Members of the National Youth Theater modeled SS Daley’s first solo show © Haydon Perrior for Thomas De Cruz Media (@haydonperrior for @thomasdecruzmedia)

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