Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

In the West, investors worry about black swans. These are hard to predict and rare events

that are beyond the realm of normal expectations. In China, they're more concerned with what they

call grey rhinos, large and visible problems that are ignored until they start moving fast.

A good example of a grey rhino is China Ever Grant Group, which finally missed making a

bond coupon payment on Monday when its 30-day grace period ended.

While rating agencies have not officially declared a default, or at least as of the time of this recording,

S&P Global Ratings did say yesterday that a default is inevitable.

To give you an idea of how tight things are for Evergrand, they missed a coupon payment

of $82.5 million when their total liabilities exceed $300 billion.

To convert those into more understandable numbers, the average American is about $53,000 in

debt. And the coupon that Ever Grant missed after

scraping around for 30 days and selling anything they could is equivalent to around $14.57

cents to that average American as a percentage of overall debt. So things are pretty tight. So what's been going on lately?

Well, after the market closed last Friday, Everground revealed that it would struggle to

repay a previously undisclosed guarantee obligation of $260 million. They announced that

there's no guarantee that the group will have sufficient funds to continue to perform its financial obligations, and that it plans to actively engage with offshore creditors to formulate a viable restructuring plan.

Hours later, Evergrand's chairman was summoned to a meeting with Chinese government officials.

Around the same time, the Chinese Central Bank, the National Securities Regulator and the Chinese

banks regulator, all issued what looked like coordinated statements that Evergrand's

woes stemmed from management errors and that its crisis would not destabilise

China's financial system. On Monday, shares in Evergrand fell to a record low in Hong Kong trading

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