Chinese real estate developers have a heap of international debt to refinance this year, and strict lending terms increase the risk of default.
Real estate companies will have to repay up to $ 53.5 billion in offshore debt this year, according to fixed income research firm CreditSights. This is a significant increase from $ 25.4 billion, which was due in 2020. The majority of debt ($ 47.6 billion) is dollar bonds. CreditSights figures include bonds with maturity and a small amount of puttable debt that has a long maturity but the investor has the right to sell back in 2021.
At the same time, support from China’s strong state-owned banks has weakened, and profits continue to recover after the fall in the early stages of the pandemic, and regulators are taking a more strict stance on financial risks in this sector.
To complicate matters, international defaults by Chinese borrowers, including some small real estate companies, have become more common in recent years. Also, at the end of last year, a series of state-owned defaults upset investors in China’s huge land bond market, which is also an active borrower of the yuan.
Yields are high compared to many other investments, but analysts and investors say the market is likely to make a clear distinction between healthier and weaker borrowers.
Chinese real estate developers have huge debts to refinance
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