“Troubled developers are still struggling to repay debt as home sales continue to fall. Their dollar-denominated bonds are still trading at troubled levels, debt issuance has nearly run out, and the sector is lagging stock markets significantly.”, — write: epravda.com.ua
Troubled developers are still struggling to repay debt as home sales continue to fall. Their dollar-denominated bonds are still trading at troubled levels, debt issuance has nearly run out, and the sector is lagging stock markets significantly. This is reported by Bloomberg. The debt crisis in the real estate market in China has been going on for the fifth year. Alarm bells have rung again in recent weeks when the banking regulator ordered top insurers to report their financial exposure to one of China’s biggest developers, China Vanke Co, to assess how much support the company needs to avoid bankruptcy. In Hong Kong, New World Development Co. tried to postpone the repayment of some loans, and Parkview Group put up for sale a landmark commercial complex in Beijing. The latest signs of stress add to concerns that the worst is far from over for China’s housing sector. Vanke’s trouble shows that the liquidity crunch is hurting one of the few big builders that has so far avoided default. The problems faced by its Hong Kong counterparts, meanwhile, mean the contagion is increasingly being felt offshore. “Although recent government policies have helped to halt the rate of decline, the sector may need another year or two to bottom out. Against this background, we cannot rule out the possibility of new bankruptcies next year, although the overall level should be much lower than before,” says Lucror Analytics Senior Credit Analyst Leonard Lowe. So far, the state’s rescue measures have been aimed at preventing the collapse of real estate prices, protecting owners of unfinished apartments and using public funds to absorb excess supply. At the same time, politicians decided to just watch how former industry giants China Evergrande Group and Country Garden Holdings Co. became bankrupt. Reminder: China may relax restrictions on non-local home buyers to stimulate demand.