This along with the upcoming debt ceiling in which republicans have vowed to not support is driving the markets today. What do you think? Just a "bump on the road" or something major?
"The problem is too much debt. With today¡¯s decline, Evergrande has about a $4 billion market capitalization and $90 billion in debt on its balance sheet, but $300 billion including unpaid bills. Fears of default are hitting markets everywhere. European stock markets are down about 2%. S*P 500 and DJIA futures are down 1.3% and 1.6%, respectively.
Evergrande debt isn¡¯t enough to derail the global economy on its own. The problem is if Evergrande problems lead to problems for lenders to Evergrande and then for other companies that need to borrow money from banks and the bond markets. That¡¯s the nature of credit contagion.
CDS pricing is, essentially, basis points of bond value paid a year for insurance. There are 100 basis points in a percentage point. At 40, an investor is paying 0.4% a year to insure against HSBC default.
In the coming weeks, investors will hear about debt restructurings and, potentially, bailouts for Evergrande-related banks. Tracking the HSBC CDS charts is one way to see if the steps taken to contain the crisis are working."
As per: ( I don't subscribe to it, got the article through a free link)
"Schrödinger's bet." A bet that loses when you bet it but wins when you DON'T bet it...
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To remove first post, remove entire topic.
This along with the upcoming debt ceiling in which republicans have vowed to not support is driving the markets today. What do you think? Just a "bump on the road" or something major?
"The problem is too much debt. With today¡¯s decline, Evergrande has about a $4 billion market capitalization and $90 billion in debt on its balance sheet, but $300 billion including unpaid bills. Fears of default are hitting markets everywhere. European stock markets are down about 2%. S*P 500 and DJIA futures are down 1.3% and 1.6%, respectively.
Evergrande debt isn¡¯t enough to derail the global economy on its own. The problem is if Evergrande problems lead to problems for lenders to Evergrande and then for other companies that need to borrow money from banks and the bond markets. That¡¯s the nature of credit contagion.
CDS pricing is, essentially, basis points of bond value paid a year for insurance. There are 100 basis points in a percentage point. At 40, an investor is paying 0.4% a year to insure against HSBC default.
In the coming weeks, investors will hear about debt restructurings and, potentially, bailouts for Evergrande-related banks. Tracking the HSBC CDS charts is one way to see if the steps taken to contain the crisis are working."
As per: ( I don't subscribe to it, got the article through a free link)
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