Fisheye and Aerial View of Beijing Skyline at Night
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This past fall, global financial markets were shaken by debt defaults at Chinese real estate giant Evergrande Group. According to Moody’s Investors Service, more defaults in China’s property sector could be on the way due to ongoing liquidity constraints.

“Tight funding conditions and sizable refinancing needs (including around US$32 billion of offshore bonds) for the rest of 2022 will continue to pressure developers’ liquidity and increase the number of defaults,” Moody’s reported.

Since the start of 2021, there have been 15 defaults by Chinese developers, including six so far this year, the report said.

“These were largely driven by the deterioration in funding access for the property sector that became prevalent in the second half of 2021,” Moody’s said, adding that Chinese developers continue to face trouble accessing funding, particularly at companies with large offshore debt exposure and limited liquidity buffers.

Lower-rated developers (rated B and below) account for a large share, about US$24 billion worth, of the debt maturing this year, Moody’s said. “Their generally weaker liquidity and access to funding will expose them to higher refinancing and default risks.”