China tries to manage global message on Evergrande collapse

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A barrage of commentary from China’s top institutions shows authorities are stepping up efforts to manage the international message on China Evergrande Group’s collapse - even if the developer itself is staying silent about its default status.

English-language statements from agencies including the China Banking and Insurance Regulatory Commission, along with a recorded broadcast from People’s Bank of China Governor Yi Gang on Thursday, suggest Beijing is seeking to target global investors with a clear message: there won’t be a bailout of Evergrande, but the risks are ring-fenced.

It’s an unusually coordinated approach to maintain control over the global narrative about a failing company. 

The first signs of future policy easing, kicked off by Premier Li Keqiang’s remarks of a possible cut to banks’ reserve requirement ratio, also coincided with the first flurry of Evergrande announcements and helped spur a rebound in some of China’s beleaguered dollar junk bonds. At the same time, there’s been scant mainland media coverage of the default. 

Overseas investors have taken the biggest hit since crisis at Evergrande emerged. Stress levels in China’s offshore debt markets have remained at extremely elevated levels, Bloomberg’s China credit tracker shows. The worst rout in a decade among Chinese junk dollar bonds sent yields to a fresh high before paring to about 20%.

Meanwhile, some global debt funds saw record losses. The nation’s far-bigger onshore market, by contrast, has remained much more resilient. 

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