Stablecoin Tether says holds no Evergrande commercial paper By Reuters
HONG KONG (Reuters) – Tether, the world’s largest ‘stablecoin’, said in a statement it does not hold any commercial paper or securities issued by embattled developer China Evergrande Group, as regulatory scrutiny into risks from this type of token grow.
Evergrande has more than $300B in liabilities and it is currently under fire for trying to raise money. The company, which is struggling between a massive meltdown, managed collapse, and a bailout from the government, seems like it could be on the brink of disaster.
According to the company, “Tether doesn’t hold Evergrande commercial paper or any other debts or securities and it has not done so.”
Tether holds a large amount of commercial paper in high-rated, A-2 issuers.
The stablecoins, digital tokens that have a fixed value and are supported by assets (often the U.S. dollars), are being increasingly scrutinized by regulators. Some observers raised concern about tokens’ liquidity when there is stress.
The company stated that approximately half the $62.8 billion worth of Tether assets at the end June 2021 were secured by commercial paper or certificates of deposits.
According to filings, Evergrande’s main division had 205.7 billion Yuan ($32 Billion) of commercial paper as of the end 2020.
Following a downgrade that market participants deemed to be indicating an increase in defaults and restructuring, Evergrande applied Thursday for the suspension of trading on its onshore corporate bonds.
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