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Chinese Builders’ Credit Profiles Worsening, Ratings Firms Warn

  • Fitch took 9 negative rating actions on the sector this year
  • S&P says recovery in China property market ‘rather fragile’

Credit rating companies are warning that the financial health of property developers in China is deteriorating even as the nation’s real estate market shows signs of recovery.

Fitch Ratings said Tuesday that a divergence in the performance of Chinese developers is driving more rating downgrades and outlook cuts in the industry, while S&P Global Ratings issued a report Monday saying that an aggressive expansion of land purchases for construction has led to weaker credit profiles for some builders. Moody’s Investors Service also reiterated Monday that the pace of Chinese home sales growth will likely moderate to a “single-digit percentage” in the 12 months through May 2017.