![]() "In other words, will Evergrande choose to just default on offshore bonds while honouring onshore commitments?" Varathan asked. ![]() ![]() A cross default occurs when a default triggered in one situation spreads to other obligations, leading to a broader contagion. "An additional point of interest though is whether the coupon due on offshore bonds will get a less preferential treatment to onshore bond coupons - especially given the asymmetric arrangement whereby offshore default does not trigger cross-default (whereas onshore default triggers cross-default for offshore)," Varathan told CNBC. The priority on domestic investors will therefore have implications on the default risks for offshore dollar-denominated bonds - mostly held by institutional or other foreign investors - versus onshore bonds, mostly held by domestic investors. ![]()
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