Wednesday, October 27, 2021

Gramercy says it added Evergrande exposure as a bond price crater

NEW YORK – Gramercy said Thursday it “added a short position” in China Evergrande Group bonds as prices have fallen where there is “compelling risk/reward”.

The investment manager, an expert in emerging markets, said the decision was made in view of the drop in bond prices in the dollar zone by up to 30 cents and Evergrande’s “substantial non-core assets … as well as the essential nature of the venture.”

Prices of dollar-denominated Evergrande bonds maturing next year to 2025 have fallen to 26 or 25 cents on the dollar, Refinitiv data shows.

With $305 billion in liabilities, cash-strapped real estate developer Evergrande has raised concerns that its crisis could spread through China’s financial system and resonate around the world.

Gramercy did not provide details of the nature of its current Evergrande exposure or whether it added on- or off-shore bonds to its holdings. It said growth in China was likely to disappoint, compared to the market consensus, but did not expect a “shock of physical activity”.

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The announcement of bond status was included in Gramercy’s strategy outlook for the fourth quarter and comes days after BlackRock, the world’s largest asset manager, said it was slowly returning to Chinese equity markets after a sharp decline. and on the condition that Beijing would soon start providing incentives again. .

As part of its fourth-quarter outlook, Gramercy said it still favors sovereignty, high yield on investment grade and hard currency on local currency to emerging market corporate debt.

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This News Originally From – The Epoch Times

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