Two of China’s strongest developers face ratings cuts by Moody’s
MOODY’S Investors Service has put two of China’s few investment-grade developers on review for possible downgrade, the latest sign that fallout from the real estate industry’s debt crisis is spreading.
China Jinmao Holdings and China Vanke are facing possible cuts, part of a number of ratings actions announced by Moody’s on Thursday following last week’s cut of its sector view.
Jinmao is currently rated just one notch above junk territory while Vanke is three steps into investment grade. The downgrade reviews “reflect high uncertainties” about their ability to recover weakened credit metrics and financials “amid uncertain recovery prospects for China’s property market,” according to the ratings firm.
Chinese property firms have seen new-home sales slump anew the past several months while debt worries involving large builders Country Garden and Sino-Ocean Group have weighed on the market.
Moody’s lowered its sector outlook to negative on Sept 14 “amid weaker economic growth prospects and homebuyers’ concerns over timely project completion and delivery, which dampen property sales despite government support measures.”
In addition to the Vanke and Jinmao downgrade reviews, the ratings firm on Thursday lowered its outlook to negative on seven other builders — China Resources Land, China Overseas Land & Investment, China Overseas Grand Oceans Group, Yuexiu Property, Poly Developments and Holdings Group, Shum Yip Group and Greentown China Holdings.
Government data released last week showed that Chinese new-home price declines accelerated in August. The loosening of mortgage restrictions resulted in a spurt of homebuying early this month, but sales slowed as September has progressed. BLOOMBERG
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