Stablecoin Tether says it does not hold any commercial paper from Evergrande in recent a statement. Evergrande, China’s second-largest property developer by sales, recently warned that it was in danger of defaulting on massive debts. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out.
The struggling real estate giant has listed $300 billion in total liabilities and says it needs to find funds quickly. A government bailout is also a possibility. A commercial paper report from Evergrande at the end of 2021 showed its main unit had $32 billion, just around 10% of its total liabilities.
Evergrande has now had to suspend trading of that unit’s onshore corporate bonds following a downgrade, another red flag pointing towards an impending default. The downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. The downgrade from A to AA applies both to the bonds and their issuer rating. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future.
Evergrande was successful in raising around $8 billion by August, according to a report from Bloomberg, but it is just a drop in the pan compared to what it still owes.
Tether states its position
According to a spokesperson from Tether, “Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so. As we have indicated in our published statements and 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.”
According to Reuters, around 50% of Tether’s $62.8 billion in held assets at the beginning of July 2021, was backed by commercial paper and certificates of deposit.
In a series of tweets about the Evergrande news, partner at Cinnemhian Ventures Adam Cochran, said that “IF either Tether or USDC did meltdown in a global collapse though, it’d actually be bullish for crypto, as if you couldn’t use them to cash out, people would just start bulk converting them into BTC/ETH regardless of price.”
Cochran added that, despite not being a well-known name in the West, the failure of Evergrande could have massive fallout. “There is a chance that we’re currently staring down the barrel of the next financial meltdown.”
Trusted
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
