, Columnist
China’s Warning to Evergrande Was Aimed at Fantasia, Too
The central bank wants to prevent what mainland bond investors call “eloping:” indebted companies refusing to pay up.
No more runaway brides.
Photographer: ANDREJ ISAKOVIC/AFPThis article is for subscribers only.
Bond investors look at two things: A company’s ability to pay, and its willingness to pay. The former is accounting and pure business, while the latter is a matter of faith.
On Friday, the People’s Bank of China sent two signals. It said financial risks posed by China Evergrande Group, which has more than $300 billion in liabilities, was “controllable.” That’s code for “no bailouts,” and it disappointed investors hoping for one.