Evergrande bond trading halted on reports of cash crunch
Extremely volatile session in the company's shares. We got reports of developers fearing a cash crunch. Let's bring in China Markets co anchor David English, David Get us up to speed with the story. It is a fast paced, developing one. Certainly we've had news in the last hour. Absolutely absolutely. And in fact, I'm just looking at just the shares right now. And we have about 30 40 minutes left before we entered a lunch break here in Hong Kong. We It probably fell yesterday. It fell at the open, then erase all those losses and traded higher and as we speak, it's not a raise. As much as what I think a 7% game. I mentioned it earlier when I was speaking with Yvonne and Tom. There's a lot of ifs in the story, and certainly it depends where you go and how this develops and could well be have massive market implications. That could mean one option or one scenario, or it also could be the world's Biggest nothing burger, really, if it does avarice that cash crunch But again there lots of there's a lot of uncertainty right now, which, I guess partly explains one to move in the equity market and second. More importantly, the pressure that has been consistent In the bond markets where you have, say 24 and five year bonds of the company that owns the local bonds, for example, maturing 2023 2024 falling as much as 20% last I checked in Shanghai. And have been have been halted, in fact, for about 30 minutes, But that was as of about an hour ago, so they should be trading right now, But it's it's precisely Rish and has how you would expect something like this to play out in the market. To a lesser extent in the equity markets, But the money's as they mentioned are continuing to be under pressure. We're trading over 90 yesterday were roughly in the mid seventies right now. Dave. It does seem like investors, a mauling the implications of this I mean, take a look at the stocks. You know, in the money in losses back and forth. What sparked this in the first place? What's this warning coming from the company? So it was. It was a letter that the company on it was a letter, dated about a month ago and it was from the company was sent to the Guandong government and essentially outlining If you will, the worst a really bad scenario. I wouldn't see worse case a really bad scenario in which if if they don't manage to get support for restructuring and part of that restructuring with then see, perhaps, or possibly see Them getting a listing in Shin Jin. If they don't get back, they're up against a deadline. January 31st, and that's when strategic investors may bow out. If that doesn't get extended, then it's this cash crunch $19 billion, as much as that. And to put that into context, size and scope. That's over 90% of their cash and cash equivalents. Not they're not. They're total assets but cash, but in other words, it's a sizable portion that they have to face. Not. The company's also come out separately with a statement responding to certain things that name seen on social media, and I'm going to read that just so I could be very, very precise here that the relevant documents and pictures Are fabricated as pure and are pure defamation, causing serious damage to the company's reputations. That's two sides of the story is an ongoing and developing one. As you would imagine.