Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<ul>
<li>
Default: On December 6, 2021, several investors appear to have confirmed that China Evergrande Group (3333.HK) [Evergrande] does not have the financial wherewithal to cover grace period payments;</li>
<li>
Fire Brigade Called: Evergrande established a risk-management committee (RMC) to assist in "mitigating and eliminating the future risks", in addition to Guangdong Province disseminating a team to Evergrande; and</li>
<li>
Intensified Bank Risk: Shenjing Bank (2066.HK) has CNY 129.4 bn exposure to Evergrande, implying stated NPLs of 24.4%. Other bank creditors: China Minsheng, China Zheshang, Shanghai Pudong, and Citic Trust.</li>
</ul>



Default: On December 6, 2021, several investors appear to have confirmed that China Evergrande Group (3333.HK) [Evergrande] does not have the financial wherewithal to cover grace period payments;

Fire Brigade Called: Evergrande established a risk-management committee (RMC) to assist in "mitigating and eliminating the future risks", in addition to Guangdong Province disseminating a team to Evergrande; and

Intensified Bank Risk: Shenjing Bank (2066.HK) has CNY 129.4 bn exposure to Evergrande, implying stated NPLs of 24.4%. Other bank creditors: China Minsheng, China Zheshang, Shanghai Pudong, and Citic Trust.


<ul>
<li>
Stadium Levy:Likely Guangzhou City Construction Investment Group has seized the halted China Evergrande Group’s (3333.HK) [Evergrande] stadium project in order to dispose of it;</li>
<li>
Stake Sale:In order to stave off default, Evergrande’s Chairman reduced his family’s stake, raising the equivalent USD 344 mn; and</li>
<li>
Guarantee and Grace Period:Investors are threatening to re-invoke Evergrande’s Jumbo Fortune bond guarantee, and we await the expiry of another 30-day grace period expiry on December 6, 2021.</li>
</ul>



Stadium Levy:Likely Guangzhou City Construction Investment Group has seized the halted China Evergrande Group’s (3333.HK) [Evergrande] stadium project in order to dispose of it;

Stake Sale:In order to stave off default, Evergrande’s Chairman reduced his family’s stake, raising the equivalent USD 344 mn; and

Guarantee and Grace Period:Investors are threatening to re-invoke Evergrande’s Jumbo Fortune bond guarantee, and we await the expiry of another 30-day grace period expiry on December 6, 2021.


China Evergrande Group – Levies and Liquidations

<ul>
<li>
USD Bond Payments Continue:  China Evergrande Group (3333.HK) [Evergrande] magically made another set of 11th hour interest payments of USD 148 mn to bondholders on Wednesday, November 10, 2021;</li>
<li>
Trial Balloon Not a Panacea: Mainland Chinese authorities hinted a readiness to loosen their grip on the issuance of CNY-denominated bonds by real estate companies; and</li>
<li>
Watch Your Bank Risk: Evergrande has already been in contact with lenders for loan extensions. Main bank, Shenjang Bank is on the verge of announcing 20% plus NPLs. </li>
</ul>



USD Bond Payments Continue:  China Evergrande Group (3333.HK) [Evergrande] magically made another set of 11th hour interest payments of USD 148 mn to bondholders on Wednesday, November 10, 2021;

Trial Balloon Not a Panacea: Mainland Chinese authorities hinted a readiness to loosen their grip on the issuance of CNY-denominated bonds by real estate companies; and

Watch Your Bank Risk: Evergrande has already been in contact with lenders for loan extensions. Main bank, Shenjang Bank is on the verge of announcing 20% plus NPLs. 


China Evergrande Group – Making Those Payments

*Loan Defaults and USD Bond Payments Set To Continue:  China Evergrande Group (3333.HK) [Evergrande] magically made another 11th hour interest payment of USD 47.6 mn to bondholders on Friday, October 29, 2021 – escaping another default by the skin of its teeth, just as its 30-day grace period with bondholders was about to end. While the market is worried about a China Huarong Asset Management (2799.HK) default crippling the country’s USD credit market, they too should understand that any bond default by Evergande likely roils this market as well; and*Watch Your Bank Risk: According to Bloomberg, Evergrande has already been in contact with its lenders to request loan maturity extensions, including: China Minsheng Bank (1988.HK), China Zheshang Bank (2016.HK), Shanghai Pudong Development Bank (600000.CH), and Citic Trust (267.HK).  There would appear to be a limited amount of budging by its lenders. Its main bank, Shenjang Bank (2066.HK) is also on the verge of announcing NPLs in the 20% plus range.

*Loan Defaults and USD Bond Payments Set To Continue:  China Evergrande Group (3333.HK) [Evergrande] magically made another 11th hour interest payment of USD 47.6 mn to bondholders on Friday, October 29, 2021 – escaping another default by the skin of its teeth, just as its 30-day grace period with bondholders was about to end. While the market is worried about a China Huarong Asset Management (2799.HK) default crippling the country’s USD credit market, they too should understand that any bond default by Evergande likely roils this market as well; and*Watch Your Bank Risk: According to Bloomberg, Evergrande has already been in contact with its lenders to request loan maturity extensions, including: China Minsheng Bank (1988.HK), China Zheshang Bank (2016.HK), Shanghai Pudong Development Bank (600000.CH), and Citic Trust (267.HK).  There would appear to be a limited amount of budging by its lenders. Its main bank, Shenjang Bank (2066.HK) is also on the verge of announcing NPLs in the 20% plus range. 

China Evergrande Group – Dodging Another Bullet

*Loan Defaults and USD Bond Payments Set To Continue:  China Evergrande Group (3333.HK) [Evergrande] magically made an 11th hour interest payment of USD 83.5 mn to bondholders on Friday, October 22, 2021 – escaping default by the skin of its teeth, just as its 30-day grace period with bondholders was about to end. While the market is worried about a China Huarong Asset Management (2799.HK) default crippling the country’s USD credit market, they too should understand that any bond default by Evergande likely roils this market as well; and* Worrisome Comments By  PBOC Governor Yi: The mainland Chinese government rarely comments on a single entity, which is why Governor Yi’s thoughts are alarming. “First, we’re going to try to prevent contagion to other real estate companies. Second, we’ll prevent contagion to other parts of the financial sector.” This self-inflicted wound will require a tourniquet to stop the bleeding; expect non-D-SIFI bank and insurer failures in mainland China.

*Loan Defaults and USD Bond Payments Set To Continue:  China Evergrande Group (3333.HK) [Evergrande] magically made an 11th hour interest payment of USD 83.5 mn to bondholders on Friday, October 22, 2021 – escaping default by the skin of its teeth, just as its 30-day grace period with bondholders was about to end. While the market is worried about a China Huarong Asset Management (2799.HK) default crippling the country’s USD credit market, they too should understand that any bond default by Evergande likely roils this market as well; and* Worrisome Comments By  PBOC Governor Yi: The mainland Chinese government rarely comments on a single entity, which is why Governor Yi’s thoughts are alarming. “First, we’re going to try to prevent contagion to other real estate companies. Second, we’ll prevent contagion to other parts of the financial sector.” This self-inflicted wound will require a tourniquet to stop the bleeding; expect non-D-SIFI bank and insurer failures in mainland China.

China Evergrande Group – China’s Wrecking Ball

China

Shengjing Bank is a commercial bank offering a comprehensive range of banking and financial services, including corporate loans, personal loans, deposit-taking, wealth management, and trade financing, through its Corporate Banking, Retail Banking, and Treasury Business segments. The bank was established in 1997 and is headquartered in Shenyang, Liaoning Province, China.

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Shengjing Bank (2066 HK)

China Evergrande Group – Fire Sale

EVERGRANDE: Several investors appear to have confirmed that Evergrande failed to cover grace period payments. Shenjing Bank has CNY 129.4 bn...

Thomas J. Monaco

China Evergrande Group – Levies and Liquidations

EVERGRANDE: Authorities have seized Evergrande's stadium project. The Chairman reduced his family’s stake, but we await the outcome of a bond...

Thomas J. Monaco

China Evergrande Group – Making Those Payments

EVERGRANDE: Evergrande magically made another set of 11th hour interest payments of USD 148 mn to bondholders on Wednesday, November 10, 2021 -...

Thomas J. Monaco

China Evergrande Group – Dodging Another Bullet

EVERGRANDE: Evergrande magically made another 11th hour interest payment of USD 47.6 mn to bondholders on October 29th – escaping default....

Thomas J. Monaco

China Evergrande Group – China’s Wrecking Ball

EVERGRANDE: Evergrande magically made an interest payment to bondholders, escaping default by the skin of its teeth. This self-inflicted wound...

Thomas J. Monaco

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