FUD blasting thread about Evergrande - The Asian property developer that everybody is talking about and yet nobody really knows about.

I dealt in Asia Credit and i have seen some particularly bad takes on this whole EVERRE situation.

[2/n] First of all - lets get this out of the way - Evergrande will go into liquidation without government help.

[3/n] However, even if it goes into liquidation. The impact on the external world will be VERY limited. The total value of USD and HKD bonds that it has outstanding is only about 21.2billion
[4/n] These bonds are trading at 25c to the dollar - so even if we have a total default - the impact to investors will only be about 5.3bn. The biggest holders of EVERRE bonds are HNW clients - these junk bonds are a retail favourite
[5/n] And no. Because EVERRE is a junk rated chinese developer - it cannot issue commercial paper. I.E CIRCLE and TETHER probably are NOT exposed to EVERRE risk
[6/n] The biggest impact of an EVERRE default is actually within the whole Chinese ecosystem which
1) purged crypto in May
2) The china government has a mandate of social stability which probably means that they will bail out EVERRE
[7/n] EVERRE is not facing a profitability crisis - it is facing a liquidity crisis. If you look at the balance sheet, it is shored up with Land....the only reason why it hasnt managed to dispose of land assets is because competitors are waiting to pounce
[8/n] This is reflected in the share price - even at 3HKD per share - EVERRE still has 5bn USD market cap....doesnt really sound like a company on the brink of bankruptcy does it?
[9/n] The genesis of EVERRE's troubles began with the 3 red lines campaign for deleveraging - Getting a massively levered company to delever quickly is like asking 900 pound man to lose 200 pounds instantly. Obesity is not what kills you but the weight loss
[10/n] For all the crypto natives who are familiar with liquidations ... in the real world liquidations work differently. Crypto can drop 90% in 1 hour...land drops 5% in a year and that is ALOT. And there is a prospect of a government bail out - the bigger you are
Conclusion - This entire EVERRE saga is a race to see when the CCP will blink - the impact of an EVERRE default will be huge in China but otherwise muted outside of China. The offshore bonds are freely traded and investors have already taken that 75% mark to market losses.

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More from @hodlKRYPTONITE

10 Jul
For everyone out there talking about a bubble in risk assets (yes I know being a bear sounds smarter) - where else are you going to put your money? Negative yielding bonds? HY bonds that don’t beat inflation? Or cash that’s getting printed at 40% yoy.
With the economy opening up, velocity of money is going to increase - is inflation going to slow down? Next while financial markets have boomed, the real economy is deeply hurt - will the fed raise rates?
How I see it is that - rates are going to be held low and for those complaining about debt, inflation is going to help you erode away all those pesky debt. Do you want to hold cash or hold stocks of companies that are able to raise prices with inflation?
Read 4 tweets
24 Jun
[1/n] Recently there's new FUD about GBTC unlocks being extremely bearish for the market - this is not necessarily true. Let me explain why
[2/n] Firstly GBTC is a trust that holds BTC, you can create GBTC by subscribing into the fund. However, new subscriptions have a 6 months lock up. People hold GBTC for various reasons i.e lack of knowledge to self custody

[3/n] Right now, over this week we have about 34,630 BTC worth of GBTC unlocking in the trust - that's about 1.1Bn USD worth. However - this does not necessarily translate into selling pressure in the market Image
Read 13 tweets
8 Jun

As BTC plunges, expect massive amount of Saylor FUD - that this man will be forced to sell.

The situation is not as dire - let me explain
[2/N] The latest bond issuance will only be senior secured on the BTC that he plans to accumulate on the proceeds from this issuance.

I.E - Even if this 400M bid fails to support the market and there is liquidation - the 92,079 of BTC held will NOT be at risk
[3/N] Lets take a further look at his capital structure - in particular the debt component

He has 2 currently outstanding bonds - One is a zero coupon 2027 Maturity Convertible bond, the other is a 0.75% coupon 2025 Maturity Convertible bond
Read 9 tweets
7 Jun
1/n Testing out zeta and i must say i never thought binary options would find their way into defi so soon

#solszn $zeta

What are binary options/digital options? - basically they are options where the payoff is either 0 or 100% Image

By defining the payoffs to either 0 or 1 - at the onset of every single position, your maximum loss can be defined and constrained

For those inclined to speculate, binary options add another way to trade - especially if you think that the price movement will happen

over the next 30 minutes - otherwise the shortest exposure you can obtain is currently on the daily..this offers INSANE leverage and if you are wrong, all you lose is the initial premium you put in.
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