China developer loans have jumped 60 percent this year with plenty of deals in the works. The Bloomberg Default-Risk Model to show the deteriorating creditworthiness of the industry.
Chinese debtors are increasingly turning to the loan market for funding as the U.S. Federal Reserve raises dollar borrowing costs and China’s deleveraging campaign stokes fears of default. Speculation that local authorities may limit funding from pre-sales of apartments has also hurt confidence. Country Garden Holdings Co., the nation’s biggest developer by sales, sought to borrow $2 billion from banks in early July and still hasn’t closed the deal. China Evergrande Group has had a Hong Kong dollar deal in the works since February.
China real estate loans have risen 60 percent from year earlier, as indicated at the bottom right. Click the issuer name for details. Triwater Asset Management is borrowing in part to fund a China Vanke Co.-led acquisition of Global Logistic Properties. Agile Group Holdings Ltd. and Shimao Property Holdings Ltd. were borrowing primarily for refinancing.
Chinese real estate developers have the equivalent of $18 billion in debt due in 2019 and $16 billion in 2020, according to data compiled by Bloomberg that covers major lending activity. U.S. dollar and Hong Kong dollar debt become more expensive to service as the
The monitor shows that in the past 90 days, as companies reported first-half earnings, 10 Chinese real estate loan issuers saw their implied debt grade falling (shown in red) by at least three rungs. Some 28, including Country Garden, have had a one-rung drop.
The plot is thickening. Which, in regard to Global Macro, isn’t it always?
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