 Okay, it is Tuesday the 14th of September and we're doing a new breaking podcast on Tuesday, so a little earlier than our normal Friday slot. I'm joined by Eddie Donmez to talk about something you may have read about, but a company you might not know a lot about, which is Evergrande, which is one of the world's most indebted companies. Its shares have tumbled 75% this year, and it's sparking fears among what analysts are saying, a risk of contagion spreading from China and their property market to potentially not just domestically, but to foreign shores. So, Eddie, who are Evergrande? Yeah, Evergrande probably not too familiar for the general Western public viewers, but very familiar in China. But it's a very, very large property developer so everyone's now terming this, you know, China's layman brothers moment or if Evergrande is going to be the next layman brothers. So this story has really been rumbling on for a while actually, you know, their shares is down 80% year to date but it's really reaching fever, fever pitch at the moment. There's riots and protests outside the offices of Evergrande. And of course now there's serious fears that this company could go through a bankruptcy. And there's a kind of difference between a chapter 11 bankruptcy and a chapter seven. They've now hired Hula hand Loki as one of its kind of bankruptcy advisors. Just yesterday, they were talking and basically dismissed the rumor that they were facing kind of bankruptcy fears but now this is really kind of coming to a head. Why are they in trouble then? So, they've got 310 billion. Yes, I said billion in liabilities so they've got 7 billion of debt due next year and I think 670 million in just coupon payments do this year for just the coupon payments. So they've got a huge amount of debts, but not only debts so of course liabilities we kind of associate with debt so basically to pay creditors. They've also got things like accounts payable kind of a boring accounting term. What this basically translates into is kind of payments for suppliers for things like raw materials of course they've got the wages for the employees, and the rest of the kind of inputs for their kind of construction costs so they're in this really wicked liquidity crunch at the moment because, of course, property developers, they build properties right. But unfortunately, they can't they don't have enough liquidity to finish the projects that they're already working on to then sell to then finance a new construction. So they're in this kind of liquidity crunch where it's really kind of spiraling out of control. So, leads to the question then what's next surely the government needs to step in at this point. So, of course context is everything. And as we've seen the CCP has been really like clamping down on mainly the technology sector. So the names like Ali Baba for example and we all know, Jack Ma went missing her last year, but they've also been kind of crunching down on really data companies technology companies user data. So now this is something that they really do not want to deal with I'm sure, but whether a kind of state bailout is kind of warranted at the moment, or desired is probably not not too true. They're most likely that probably will be a kind of state intervention of some kind, but they will not want to kind of bail out ever grand completely. But of course, they've hired hula hand Loki and Admiralty to kind of advise on this reorganization, potentially what could come next is a kind of fire sale of assets. So, just to put into context as well, the revenue of this company monthly has dropped from 11 billion a month to 5 billion from kind of June to August of this year. So their sales have dropped off a cliff. They've been providing kind of discounts like 30% discounts for their properties to kind of get them sold. But this is still not working. So they're in a real kind of pickle to put it to put it lightly and yeah the government is going to have to step in in some capacity. It's just really to what extent but so in terms of the kind of contagion element of this, of course it's the property developer itself. The creditors so those that have kind of lent money. It's the shareholders the equity holders which are likely to get nothing and these are kind of some of the top holders of Evergrande of big names like like black rock. So there, the equity is likely if there is a kind of liquidation, they're likely to be zilch so that equity will be worth nothing. So the kind of credit holders to the dollar base so the dollar denominated Evergrande bonds are likely to get something in a best case scenario of something like 25% of their money back. But of course, you know, that's not guaranteed. It's a real pickle that they're in there probably will need some kind of state intervention, but they may just kind of claim the assets and step in, and it could be this kind of weird scenario where they've got what they wanted, if you like where they've kind of sees, they're able to seize the assets and seize control. In the context of the global markets at the moment there's been an awful lot of growing chorus on Wall Street turning a little bit bearish about the general US stocks picture. And this just probably another variable to throw in the mix at the moment there was a Deutsche Bank sentiment survey came out yesterday that found 58% of professional investors see a five to 10% correction by the end it's like people are just looking at having an issue at the moment so I'm sure this story is going to get a lot of airplay today when we opened in the US. Yeah, definitely I think the mood music as a kind of is and I were discussing in the podcast before last is kind of got a little bit more somber with the kind of general economy sentiment kind of falling off a cliff. The Evergrande story is now becoming potentially a systemic risk when you add on all of these different types of things. And again, they're not just a property developer, they have electric vehicles that electric vehicle arm shares with down 22% yesterday, and they have kind of other, you know, relations with other kind of different products of wealth management arm. So there's a lot of kind of different risk out on the horizon and this kind of could spill over but it's definitely a story now to have on top of the radar, I would say. Cool. All right, well thank you Eddie, and just for the listeners we're going to be doing lots more of these kind of breaking news podcasts YouTube videos, Instagram reels and so on. Remember, we've got the new amplify me platform launching actually tomorrow 15th of September, so you can check that out at www.amplify me.com for Eddie thanks and I'll catch you for next episode. Thanks.