Evergrande Crisis Highlights Funding Risks for Developers
- Firms including Fantasia and Yuzhou have seen their bonds sink
- Property industry squeezed by housing curbs, develeraging
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China Evergrande Group’s liquidity crisis is putting the spotlight on the health of the nation’s property sector, particularly junk-rated firms.
Such companies are facing increasingly tough conditions. Borrowing costs have surged amid fears of an Evergrande failure, with the yield on an index of dollar-denominated junk bonds climbing to about 15%, the highest in about a decade. Strict rules on leverage mean companies need to reduce debt, while measures to cool the housing market are damping sales.