Fifth Of Low-Rated China Property Firms To Default: Goldman

Goldman Sachs expects almost a fifth of lower-rated Chinese property firms to default this year – and even up to a third if the situation in the country’s ailing real estate sector seriously deteriorates.

The US investment bank raised its base case default rate estimate to 19% from 11% on Thursday and its downside case estimate to 31.6% from 25.4%.

“Whilst there have not been many incidences of payment defaults in recent weeks, stresses are picking up,” Kenneth Ho wrote in a note to clients on Wednesday.

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“The coming months will see heavy bond maturities across China Property HY, with potentially more maturity extensions/bond exchanges to emerge, as well as payment defaults.”

Goldman Sachs estimates high-yields firms have $3.6 billion worth of bonds maturing by the end of the month, followed by $3.3 billion in March and another $3.7 billion in April.

Reuters with additional editing by Sean O’Meara

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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.