The Daily Update: Evergrande Muddy The Waters

The Evergrande saga continued last night after the group’s onshore property unit said in a loosely worded exchange filing that it reached an agreement with RMB bondholders on an interest payment due tomorrow. The unit said that the interest for its 5.8% 2025 bond ‘has been resolved via negotiations off the clearing house’ under a section in the filing on the bond interest payment. However, the statement didn’t divulge any of the terms of the arrangement, which in doing so keeps investors on tenterhooks.

Morgan Stanley said in a note that Beijing may start a managed debt restructuring of ‘a troubled property developer’ in the coming week, followed by policy easing next month to contain any spill over to the broader economy.

Also, we had some of the other big investment houses in the US stating that there was little chance they would be in the firing line from any Evergrande fallout. Citigroup said it has no direct lending exposure, this was echoed by Bank of America and JPMorgan people familiar said. Goldman Sachs and JPMorgan do appear on Evergrande's bondholder lists, but according to CreditSights it's ‘largely through asset-management arms and at small ultimate dollar amounts’.

We also have the latest Pret Index results in. Whilst across the globe (well, London, Paris and Hong Kong) there has been a small uptick in sales, the big movement has been in New York. The NYC midtown Pret’s as of the 16th Sept were up 11% and downtown up 15%. The increase looks to have followed the return-to-office mandates from several of the big banks. Bank of America required most employees to be back at their desks after Labor Day and Citigroup said New York workers should return at least twice a week starting 13th Sept. The chief executives of JPMorgan Chase and Goldman Sachs have been critical of working from home, saying it risks weakening ‘company cultures’, but then so do 14 hour days!! JPMorgan is also discouraging its traders from socialising at nearby bars. So, they can sit in a packed office for 12 hours a day, however, can’t go for a quick pint after work!!