China’s weakest property developers risk defaulting on their US dollar bonds, as home sales suffer and access to cash dries up due to the coronavirus outbreak, reported the Financial Times.
Defaults on dollar bonds by Chinese issuers are rare and missed payments by developers have been almost non-existent in recent years, even as overall corporate defaults in the country hit a record high in 2019.
Several midsized groups cash flows’ are now being squeezed while being shut out of the market to refinance existing debts.
Developers must pay about $20 billion in maturing US dollar bonds this year, according to data from Dealogic. They raised a record $22 billion in the first two months of the year, topping the previous high in 2019 when developers more than doubled US dollar issuance.
“The only way to survive is to have a lot of cash on hand right now,” said Cheong Yin Chin, a senior China property analyst at CreditSights in Singapore.