Given this development, Houze Song, a researcher at the Paulson Institute in Chicago, said Evergrande would likely end up paying Thursday’s interest. He said the bondholders and Evergrande could potentially strike a short-term deal involving the debt holders losing some of their exposure to Evergrande.
The fate of Evergrande and what its failure could mean for the Chinese economy has divided some of the world’s best-known investors. Billionaire investor George Soros recently argued that an Evergrande collapse would trigger a broader economic crash, while another billionaire investor, Ray Dalio, argued this week that an Evergrande default was “manageable. “.
Investors in dollar-denominated debt include Swiss bank UBS, asset manager BlackRock, UK bank HSBC Holdings, as well as a number of hedge funds. The bonds are linked to various private and public companies that are part of Evergrande but separate from its main real estate business, including an electric vehicle division. These companies could still be valuable even if the real estate industry collapses.
Despite the lingering uncertainty, equity investors appear to be expecting a better outcome from the Evergrande debacle than they did earlier in the week. On Wall Street, the S&P 500 closed more than 1% higher on Thursday, recouping its steep losses from the start of the week – in part because the executives of two of Evergrande’s creditors downplayed the risk.
Ralph Hamers, chief executive of UBS, told an investor conference Thursday that the bank’s direct exposure to Evergrande was “intangible”, adding that his problems “did not keep me from sleeping at night. According to a transcript of the software. Sentieo company.
Noel Quinn, chief executive of HSBC, admitted at the same conference that the challenges of Evergrande could seep further into the equity and credit markets.
“I would be naive to think that market turbulence does not have the potential to have a second and third order impact,” he said, calling Evergrande’s situation “concerning”.