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Comment by DebtDeflation | Hacker News Reader

Apologies for responding to my own post, but if you do a Google news search for Evergrande the first link that pops up is:

https://www.forexlive.com/news/!/evergrande-met-todays-bond-...

The title on Google News is "Evergrande Met Today's Bond Payment Deadline" but if you click to the article the headline changes to "Evergrande met at least part of today's bond payment deadline".

What is going on here?

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AFAIK the challenge is that Evergrande and its bond holders don't make public statements about the repayments, so it's unclear whether they've been made or not.

However in this case it seems that a bondholder has explicitly stated that they have not been paid by the deadline https://twitter.com/dhthakur745/status/1458499174026997760?s...

Which means that, if true, Evergrande have now defaulted.

So, the usual defaulting mechanism does not work. (Size of investment gives claim percentage, bank loans are fulfilled first).

Instead, its a quite bizarr negotiation process- local investors first, then citizens (to prevent a riot) - then if anything is left, the international investors.

If that is the full approach, then a massive retreat of investment out of china is to be expected.

That only happens after default, and default happens when a loan can't be repaid. Evergrande wasn't bankrupt yesterday, so the bankruptcy rules don't apply today. They may tomorrow, for the loans that weren't repaid today (or in the past).

Yeah, people seem to forget that "default" is a technical legal term meaning failure to fulfill a contractual obligation, in this case failure to make an interest payment on a bond by a specified date. If they didn't make the payment today, then they are in default. Bankruptcy is a more nebulous term and can refer to the filing, the court proceeding, or the final judgement. Being in default is a matter of fact and is not dependent on any of that.

The "interesting" piece with this default is whether it triggers further cross-defaults.

A couple of articles I read suggested that if Evergrande defaults on one bond it can trigger instant defaults on others.

Depends if you're a half glass empty or half glass full person, whether 2 out of 3 payments is good or bad.

It doesn't look good.

> This means that if a single one of these bonds defaults, all 23 outstanding bonds automatically have ‘default’ status

https://apnews.com/press-release/pr-newswire/business-china-...

Caching.

Or A/B title testing that is so very common nowadays.

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