Evergrande Explained (KraneShares)

  • China real estate mega developer Evergrande sparked cries of “China’s Lehman Moment” in the Western media when it postponed a scheduled debt repayment.
  • Neither a disorderly default nor a complete government bailout are likely. The most likely outcome is a government-facilitated debt restructuring, which appears to already be underway
  • Evergrande’s story is intertwined with the story of China’s ongoing economic transformation and shift away from real estate investment towards investment in growth industries such as technology and consumer products.
  • The Evergrande moment may present an attractive entry point into the Asia high yield bond market because risk controls are tightening at the same time yields have been driven up. READ MORE

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