A news flash crossed my screen today: China had bailed out Evergrande. I went looking for it on the major publications and couldn’t find it on any of them. I think it may be a fake.
The story is on CoinGape, under the headline “China Injects $19 Billion to Bailout Evergrande”, and it hangs on a quoted tweet. I can’t trace that tweet to its source.
Some context on what did happen today. Al Jazeera reports that the People’s Bank of China “pumped 120 billion yuan ($18.6bn) into the banking system through reverse repurchase agreements”. That is short-term cash lent to the banking system as a whole while Evergrande wobbles. It is a long way from writing a check to one developer, and it’s easy to see how a $19 billion headline about the central bank becomes a $19 billion bailout by the time it reaches a crypto site.
Evergrande itself is why any of this moves markets. Fortune reported last week that the company can’t sell property fast enough to meet repayment deadlines on “more than $300 billion in debt”.
Does it matter for crypto? Yeah-ish. The connection runs through Tether. As of June 30, $30.8 billion, or 49% of Tether’s reserves, sat in commercial paper and certificates of deposit, out of $62.8 billion in total assets. Tether’s commercial paper could take a hit — and the coin could slip its peg. Note that Tether says it isn’t directly connected. Last week it stated that it “does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so”, and that the vast majority of its paper is rated A-2 or above.
So the exposure, on Tether’s own account, is indirect at most. The story that set all this off is another matter. I still can’t trace the original tweet it quotes.
