Real Estate

Fitch Ratings on liquidity of China real estate developers, debt crisis


A man walks in front of unfinished residential buildings at the Evergrande Oasis, a housing complex developed by Evergrande Group, in Luoyang, China September 15, 2021. Picture taken September 15, 2021.

China’s embattled developer Evergrande is on the brink of default. Here’s why it matters

Residential sales plummeted alongside home buyer confidence. Home sales by value dropped 16.31% from last year in November, a fifth month of declines. New home prices fell 0.3% from the previous month, the largest decline since February 2015, according to Reuters.

Fitch said in its report that in a severe scenario where residential home sales drop by 30%, 12 or roughly a third of its 40 rated developers could go into negative cash flow. In Fitch’s base case — a less severe scenario — a 15% fall in home sales could result in about 13% of its rated developers suffering a cash deficit.



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