Thread by @RChoongWilkins

It's been a historic week in China's credit market -- the second largest in the world.

This is the run down of what happened, why it matters and what to watch for in 2022:

👇 THREAD 1/
bloomberg.com/graphics/china…

2/ China’s efforts to prevent a developer debt crisis from sparking financial contagion helped stemmed the biggest selloff in a decade.

But Xi Jinping’s government still faces a long list of challenges as it tries to maintain calm in its $13 trillion credit market in 2022.

3/ There've been seismic changes in China's credit markets this year. In 2022 watch out for:
* Surprise defaults
* Home sales
* Policy easing
* Pickier investors

Bloomberg's China credit tracker breaks all this down:
bloomberg.com/graphics/china…

Risks were on full display this week as Evergrande and Kaisa, two giants of the dollar bond market, defaulted.

Together they make up ~15% of outstanding dollar bonds sold by Chinese developers.

Not a surprise but this is my take on why it matters -->
bloomberg.com/news/articles/…

5/ So what does an Evergrande collapse mean for Chinese credit markets?

I chatted w/ @flacqua about precisely that, just after we broke news that bondholders hadn't received their coupon payments.

bloomberg.com/news/videos/20…

6/ We also had the inside scoop that Evergrande is planning to include all its offshore public bonds and private debt obligations in a restructuring that may rank among the nation’s biggest ever.

bloomberg.com/news/articles/…

This holistic restructure was later confirmed by officials

7/ Even PBOC governor Yi Gang is talking about the nature of Evergrande's restructure:

“The rights and interests of creditors and shareholders will be fully respected in accordance to their legal seniority”

bloomberg.com/news/articles/…

8/ We've also seen an unusually coordinated approach from Beijing as it tries to maintain control over the global narrative about Evergrande's collapse.

We've seen a barrage of English-language commentary from China’s top institutions.

bloomberg.com/news/articles/…

9/ And with a new Evergrande risk committee dominated with state firms, it looks like we'll be seeing an HNA-style restructure with the government taking the lead.

10/ What does the collapse of Evergande show us about the priorities of China's authorities?

I spoke with @bbcworldservice about who'll be taken care of first in a government-led restructuring and what that tells us to look for in 2022.

From 11m22s: bbc.co.uk/programmes/p0b…

11/ All this means the onus is on Xi in 2022:

Engineering a soft(er) landing for property firms and an Evergrande restructuring that sets a healthy precedent for the ~10 other property defaulters this year is in the hands of the state.

My take: bloomberg.com/news/articles/…