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BlackRock, UBS, HSBC Among Firms Facing Losses Due to Impending Evergrande Debt Default

September 20, 2021 Blog

As recently reported by Bloomberg and other media outlets, Chinese real estate development company Evergrande is on the verge of possibly defaulting on $300 billion in debt this week. If Evergrande defaults, this could trigger substantial losses for individual investors.

Did Investment Banks Wait Too Long to Take Action on Evergrande?

BlackRock Inc., UBS Group AG and HSBC Holdings PLC are among several firms that hold large stakes in Evergrande’s debt. According to Bloomberg, many of these firms’ positions are “held by vehicles that focus on risker emerging market or Asian credits.” Morningstar reports that these firms have been accumulating Evergrande bonds over the last several months —even as the risk associated with holding Evergrande’s debt has continued to come into sharper focus. Evergrande first publicly warned of the risk of default in August.

A Bailout for Evergrande Is Not Guaranteed

It appears that firms such as BlackRock, UBS and HSBC may have been betting on a bailout from the Chinese government. However, it is not clear that a bailout is forthcoming. According to Morningstar, “hopes for a bailout program by the central government [have become] muted,” and “[i]nvestors should not take for granted that a government rescue package” is on the way. While the Chinese government has bailed out private entities such as Huarong Asset Management in the past, the comparison to Evergrande “is not . . . apples-to-apples,” and at this point, there is no indication that the government will come to Evergrande’s (and its investors’) rescue.

Evergrande Debt Default Could Have Ripple Effects for Investors

A default by Evergrande could have ripple effects for investors. Not only will investors sustain losses in various Asian High Yield funds, but the overall market is also likely to suffer significant declines.

Recovering Investment Losses Linked to Evergrande’s Debt Default

For investors who suffer losses linked to Evergrande’s anticipated debt default, recovering their losses may involve filing claims in FINRA arbitration. Firms such as BlackRock, UBS and HSBC are required to arbitrate investor disputes. If these firms (or others) had the opportunity to protect investors and failed to do so, they can – and should – be held accountable, and now is the time for investors to consult with investment fraud attorneys about asserting their legal rights.

Speak With an Investment Fraud Attorney at Zamansky LLC

If you have suffered investment losses linked to Evergrande’s debt default, we encourage you to contact us for more information. To speak with an investment fraud attorney at Zamansky LLC in confidence, call 212-742-1414 or send us a message online now.