This article was written by Joy Liu, Wendy Tan, Jane Bi and Caroline Chu. It appeared first on the Bloomberg Terminal.
Background
A debt crisis in the Chinese property market is escalating following Country Garden Holdings Co.’s missed bond payments.
Issue
About 60% or $116 billion of the outstanding Chinese offshore real estate bonds are labeled as distressed in August. Dollar bonds extended their slump, while a measure of liquidity indicates more pain is in store for poorly-capitalized private developers.
Use Bloomberg’s FIW, CAST, and KPIC functions to analyze the bond market.
Offshore dollar bonds fell mostly across the board with Country Garden, Agile Group Holdings Ltd., Yango Justice International Ltd. and Longfor Group Holdings Ltd. securities among those that slumped the most over early August. Type “srch china offshore” in the command line and select SRCH @CHINA OFFSHORE. Type “real estate” in the amber box and choose BICS Classification – (Real Estate) from autocomplete. Click Evaluate Pricing|FIW to check out on the performance of property bonds.
Country Garden, with over 3,000 projects in China, faced a potential default after missing bond payments as the housing market sputters. China home prices dropped for a second month in July, a further sign of the deepening property downturn. Risks are also spreading to the financial sector, where a trust company with massive exposure to real estate missed payments on some investment products. Country Garden is facing a $1.63 billion maturity wall in the first quarter of 2024 and another $2.68 billion in the third quarter of 2025.
The deepening woes over defaults are hitting the broad industry with many private developers suffering from a lack of liquidity. Country Garden’s current ratio, a metric used to measure a company’s ability to meet its short-term obligations, stands at 1.25 this year, lower than an industry median of 1.41. Sunac China Holdings Ltd. and Seazen Holdings Co. are in an even worse situation with their current ratios falling below 1.
Bloomberg
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