EGRNF - Evergrande Explained

• 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 is 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.

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