Investors are pricing in almost $130bn in losses on Chinese property developers’ dollar debt on mounting worries the country’s housing market will face a protracted crisis unless Beijing steps in with a large-scale bailout, reports the Financial Times. Two-thirds of the more than 500 outstanding dollar bonds issued by Chinese developers are now priced below 70 cents on the dollar, a common threshold for distressed status, according to a Financial Times analysis of Bloomberg data.
The rising pressure on the market comes a year after Evergrande, the world’s most indebted developer, began spiralling into default, unleashing tumult throughout a sector responsible for roughly 30% of the country’s annual economic output.
Beijing’s response has been limited to incremental measures, including a cut this week to the mortgage lending rate. But analysts said policymakers’ refusal to launch a sweeping bailout may only add to the ultimate cost of rescuing the industry and could worsen the fallout for global markets and trade as Chinese growth grinds slower.