Stablecoin issuer Tether has said it does not hold commercial paper issued by Chinese real estate company Energrande, which faces imminent default to the magnitude of the Lehman Brothers collapse.
According to a Tether spokesperson, the cryptocurrency company does not own any Evergrande commercial paper, debt, or securities, and denies ever holding any of the troubled real estate company’s assets in the past. “As we have indicated in our published statements and in our most recent assurance attestation with a reporting date of June 30, 2021, the vast majority of the commercial paper held by Tether is in A-2 and above rated issuers,” the spokesperson affirmed.
Concerns surrounding the financial stability of China Evergrande Group have been mounting around the globe, as the largest real estate developer faces a $300 billion debt pile that it may not be able to make interest payments on nor repay its principal come next week. Evergrande is now the world’s most indebted real estate behemoth, and currently has more than 1.300 real estate projects across 280 Chinese cities on the go. The company also has roots in other industries, including electric vehicle manufacturing, film and TV, life insurance, and food production, as well as owns a football club and even a hospital.
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The situation is likely only going to get worse for Evergrande, which on Thursday announced via an exchange filing that its onshore real estate unit would halt bond trading in September 16 in order to allocate enough time for a full disclosure of its rating downgrade from AA to A. The company assured that trading would resume the following day, but it remains unclear as to why an entire day needs to be dedicated to making investors aware that its bonds have been downgraded from investment grade in China.
Tether, in the meantime, has almost half of its assets in commercial paper and certificates of deposit— some $30.8 billion to be exact. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. Evergrande, for its part, is the largest commercial paper issuer in China’s real estate market, owning some $32 billion worth of commercial paper at the end of last year.
Although Tether denies specifically holding commercial paper issued by Evergrande, the inevitable collapse of the real estate developer coincidentally on the 13th anniversary of the Lehman Brothers collapse will certainly send ripple effects across the broader commercial paper market.
Information for this briefing was found via The Block and Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
