Skull and Bones
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- China's property sector has faced mounting stress in recent years, with developers struggling to service their enormous debt.
- Investor anxiety about the property crisis has fueled a rout in Chinese developers' dollar bonds, which have lost 87% of their value, according to Debtwire.
- As many as 53 Chinese developers have collapsed in recent years.
The market for Chinese developers' dollar-denominated bonds has seen a meltdown over the past two years, losing a staggering 87% of value. The rout has wiped out $135.5 billion of value from $154.9 billion of outstanding notes, according to an analysis by Debtwire.
"The average price on the notes is now only a tad above 11 cents on the dollar," Debtwire co-managing editor Chaim Estulin wrote in an accompanying LinkedIn post.
The crash in Chinese builders' dollar debt is symptomatic of the broader crisis facing the nation's real-estate sector, which has seen 53 companies collapse in the space of little over two years. Investment in the sector fell 7.9% in the first half of this year, official data show. The industry as a whole shrank last quarter, resuming a contracting trend in place since 2021.
Country Garden Holdings – once China's largest developer by sales – risks being the next domino to fall, "if it doesn't cure two missed 7 August bond coupons by the end of a 30-day grace period, according to Debtwire. The company just reported a $6.7 billion loss for the first half of the year.
The embattled industry has been hanging on to every word of the Chinese government – whose long-awaited commitment to stimulate the slumping sector has not yet materialized.
It's a sector worth saving, too – China's property industry is gigantic. It accounts for about 30% of the country's overall output, and the headwinds it faces include heavy debt burdens and sluggish demand for new properties. This was a contributing factor in stunting the nation's second-quarter GDP growth, which came in at 6.3%, below economists' forecasts of up to 7.1%.
Economists remain pessimistic about China's economic prospects – forecasters polled by Bloomberg have cut their growth expectations for both 2023 and 2024.
China's property crisis deepens with 87% value wipeout in developers' dollar bonds
An 87% value wipeout for Chinese developers' dollar bonds is symptomatic of the wider crisis facing the nation's property sector, which has seen 53 companies collapse in about two years.
When Dogecoin and penny stocks are safer investment than Chinese property markets.
