Investors will be closely watching Evergrande this week to see if the property developer will be able to pay out its massive bond interest bill. The company’s $83 million payment is due on Thursday, but analysts predict it won’t be made. If these initial defaults happen, institutional and other foreign investors will likely be more affected compared to domestic investors in China, experts say. In other news, OECD officials say the U.S. economy is losing momentum in its recovery from the pandemic.
The first test for Evergrande’s debt crisis comes this week
The first test for Evergrande’s debt crisis comes this week — investors will be watching to see if the embattled Chinese property developer is able to pay out its interest due on a bond, or default on it.
The firm is due to pay interest worth $83 million on Thursday, according to data from S&P Global Ratings.
Evergrande’s 5-year, U.S.-dollar denominated bond, had an initial issue size of around $2 billion, according to market data provider Refinitiv Eikon – although the price has plummeted now.
Yields on this bond have skyrocketed to 560%, from just over 10% earlier this year, according to Refinitiv Eikon. The bond is due to mature in March 2022.
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US economic recovery from COVID-19 has slowed, OECD says
The U.S. economy is losing momentum in its recovery from the coronavirus pandemic, the Organization of Economic Cooperation and Development said Tuesday.
The Paris-based organization forecast that U.S. gross domestic product — the broadest measure of goods and services produced by a nation — would grow 6% in 2021. That’s down nearly 1 percentage point from May, when the OECD predicted GDP would grow 6.9% this year.
By comparison, GDP contracted at a 3.5% annualized rate in 2020, when the economy came to a near standstill to slow the spread of COVID-19. The virus has infected more than 42 million Americans and killed over 674,000.
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Yahoo Finance/Patrick Villanova
Boomers Face This Risk in Retirement: Here’s How To Avoid It
Baby boomers seem to be overestimating how long their retirement savings will last — or maybe underestimating how long they’ll live. New research from the Center for Retirement Research at Boston College found that Boomers may be drawing down their retirement wealth faster than previous generations because they lack the widespread access to pensions that older generations enjoyed.
Using data from the University of Michigan’s Health and Retirement Study, CRR researchers determined the more annuitized resources retirees have at their disposal, the slower they draw down their wealth. A financial advisor can help you calculate how much retirement savings and income you’ll need once you stop working.
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