Default looms larger for Evergrande

Hong Kong United Times

The main unit of China Evergrande Group (3333), Hengda Real Estate Group, applied yesterday to suspend trading of its onshore corporate bonds while rating agency S&P said it is almost certain that the developer will default.

Hengda received notice on September 15 from rating agency China Chengxin International that the bonds’ ratings had been downgraded to A from AA, and that the bonds rating and its issuer rating were put on a watch list for further downgrades, it said in a stock exchange filing.

Trading suspensions are relatively common in China’s domestic debt market following credit rating downgrades because a score below AA requires bonds to be traded via bid-ask and block platforms, rather than auctions. That prevents smaller investors, some of whom already can’t buy Evergrande’s local notes, from making speculative investments.

S&P this week further downgraded Evergrande to “CC” from “CCC,” with a negative outlook, citing reduced liquidity…

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Corporate Finance Entry #1: Credit

My credentials to give advice on these matters stem from my undergraduate and graduate school studies in Finance, Accounting and Information Technology as well as my CPA license having worked in public accounting and risk management consulting for nearly ten years. There are alot of people with aspirations to put their already operational small business into compliance; establishment of legal and tax protections.

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Obtaining a line of credit is NOT vital to run a successful business. However, obtaining a line of credit and mismanagement of this leverage – I have seen it CRUSH small businesses. I found an excellent website in which the author has very neatly categorized and compartmentalized many facets of corporate finance and accounting in language that is easy to understand.