China Avoids a Lehman Brothers Moment for Now After Evergrande Deal Announced

It looks like China has been able to push off it Lehman Brothers moment to another day:

 China Evergrande agreed to settle interest payments on a domestic bond on Wednesday, while the Chinese central bank injected cash into the banking system, temporarily soothing fears of imminent contagion from the debt-laden property developer.

Evergrande (3333.HK), Asia’s biggest junk-bond issuer, is so entangled with China’s broader economy that its fate has kept global stock and bond markets on tenterhooks as late debt payments could trigger so-called cross-defaults.

Many financial institutions have exposure to Evergrande through direct loans and indirect holdings, while any defaults will also trigger sell-offs in the high-yield credit market.

In an effort to reassure investors, the People’s Bank of China’s injected 90 billion yuan to the banking system, signalling support for markets as they braced for what is expected to be one of China’s largest-ever debt restructurings.

Reuters

You can read more at the link, but trouble could still be coming in future days and weeks for Evergrande as they have other debt payment dates coming up.