Back
Snehangshu Roy
Polymath • 4m
⚡⚡EVERYTHING TURNS OUT TO BE BUBBLE🫧🫧 This is what happens when you don't learn from the past the story of "EVERGRANDE" the biggest real estate firm once in China with a valuation of more than $45bn LGFVs, Evergrande, and China’s Hidden-Leverage Spiral (A Case Study) From 2008–2024, Local Government Financing Vehicles (LGFVs) helped Chinese provinces borrow off-budget to fund infrastructure and land development. As growth slowed and property sales collapsed, LGFVs’ cash flows proved weak versus towering debts. The 2020 “Three Red Lines” policy tightened developer leverage, exposing fragile funding loops between developers (e.g., Evergrande), LGFVs, banks, and local governments—culminating in developer defaults, LGFV stress, and Evergrande’s 2024 liquidation order and 2025 delisting in Hong Kong. Background What are LGFVs? Special-purpose, local SOEs created to borrow for public projects when local governments face legal borrowing limits. They raise funds via bank loans, trust products, notes/bonds—often collateralized by land or expected land-sale revenues. Scale: Estimates vary widely; credible ranges by think tanks and ratings agencies place local + LGFV debt well above ¥60T by end-2023, with some analyses inferring ¥75T–¥111T (≈75%–111% of GDP) when including bank loans; policy commentary in 2025 cited ~¥44T for LGFVs alone. Stress signs: Public LGFV bond defaults were rare, but non-bond obligations (commercial notes, bank loans) saw frequent payment strains; substitution and maturity extensions eased near-term risk, but structural fiscal risk remained. The Fall (2020 – 2023) In 2020, Beijing imposed the “Three Red Lines Policy”: 1. Debt-to-asset ratio ≤ 70% 2. Net gearing ≤ 100% 3. Cash-to-short-term debt ≥ 1 Evergrande failed all 3. Couldn’t borrow → liquidity crisis. 2021: Defaulted on bonds → world’s most indebted developer ($300B liabilities). Suppliers, homebuyers, investors trapped. 2022: Sales collapsed. Ghost cities grew. 2023: U.S. & Hong Kong courts ordered liquidation of Evergrande assets abroad. people never learn from past similar to 2008 MBS. stories here #Mortgage#debt#Low liquidity
More like this
Recommendations from Medial
Aditya Singh
Moments over milesto... • 8m
How Kelsey Mikula Turned Thrift Shopping Into a Thriving Business: At 27, Kelsey Mikula has an inspiring story of turning passion into profit. While studying zoology at Liberty University, she found herself buried under a staggering $880,000 in stud
See More
Tarun Suthar
CA Inter | CS Execut... • 2m
How The World is Drowned in a $300 Trillion Debt Bubble Three Times Its Size. 👀🤯 You've noticed something unsettling: Early every major country, from the US and China to the UK and India, is drowning in Debt. The US owes $36 trillion, and while
See More
chakshu asija
Hey I am on Medial • 10m
🚀 India’s iPhone Exports Hit ₹1 Trillion in 10 Months of FY25! India is making big moves in global electronics manufacturing as Apple shifts production from China. Here’s why India is becoming a key player: ✅ Government Support: The Production-Lin
See More
Jayant Mundhra
•
Dexter Capital Advisors • 5m
The West Bengal Govt's new policy to build a shopping mall in every district, ostensibly to uplift local artisans, is a masterclass in how not to merge social welfare with commerce. - It is a framework built on a fundamental misunderstanding of reta
See More
Aditya Arora
•
Faad Network • 1y
Meet the man from a village in Uttarakhand who built a 5000 CR bank. 1. Born in a village 40 km away from Jim Corbett National Park in Uttarakhand, Govind Singh had a tough childhood. He travelled 7 km to the nearest school daily and taught students
See More
Download the medial app to read full posts, comements and news.