$10 Billion Property Bond Defaults Are Just Around the Corner
Chinese local governments are tightening their oversight of developers’ pre-sales process.
Not out of the woods yet.
BloombergYou would think the worst credit events in China’s modern corporate history are behind us. In late 2022, the government vowed to stabilize the housing market, and reopened the economy after three years of harsh pandemic restrictions.
Despite these tailwinds, defaults are back. On May 14, Guangzhou-based KWG Group Holdings Ltd., one of the few developers that obtained a state guarantee for its latest yuan note issue, said it had failed to make a $119 million redemption payment, thus triggering a cross-default of all its $4 billion dollar bonds. Meanwhile, notes issued by Powerlong Real Estate Holdings Ltd. have plunged in recent days, as traders see little chance of the Shanghai-based builder repaying a $15.9 million coupon due later this month.