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Stablecoin Tether says holds no Evergrande commercial paper

Stablecoin Tether says holds no Evergrande commercial paper

FILE PHOTO: The China Evergrande Centre building sign is seen in Hong Kong, China. August 25, 2021. REUTERS/Tyrone Siu/File Photo

HONG KONG : 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, which has total liabilities of more than US$300 billion, is also in the spotlight as it scrambles to raise funds, teetering between a messy meltdown with far-reaching impacts, a managed collapse or a government bailout.

"Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said.

"The vast majority of the commercial paper held by Tether is in A-2 and above rated issuers."

Regulators are starting to pay greater attention to stablecoins - digital tokens which are pegged in value to other assets, often the U.S. dollar, and backed by a pool of assets - and some observers have raised concerns about the tokens' liquidity in a time of stress.

Approximately half of Tether's US$62.8 billion assets as of the end of June 2021, were backed by commercial paper and certificates of deposit, according to the company.

Evergrande's main unit had 205.7 billion yuan (US$32 billion) worth of commercial paper at the end of 2020, filings show.

The developer on Thursday applied to suspend trading of that unit's onshore corporate bonds following a downgrade, which market participants said indicated an increasing likelihood of defaults and restructuring.

(Reporting by Alun John; Editing by Mark Potter)

Source: Reuters


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