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China Property Turmoil Risks Upending Green Debt Market

  • Firms planning sustainable developments now face defaults: S&P
  • May hurt efforts to draw capital to fund China’s climate goals
Kaisa Group Properties as Developer Faces Payment Test Amid Liquidity Crunch
Photographer: Qilai Shen/Bloomberg
Updated on

The debt crisis engulfing the Chinese real estate sector is threatening to upend developers that have borrowed billions in green debt to fund sustainable buildings.

Two prominent firms that are struggling to meet their debt obligations, Kaisa Group Holdings Ltd. and Fujian Yango Group Co., now face “inevitable” default scenarios, according to S&P Global Ratings, which cut both issuers’ credit ratings deep into junk territory before withdrawing its assessment on both earlier this month. Together, the developers and their units sold at least $1.9 billion in ethical debt.